How High Can It Go?

We're on the escalator up right now. We need to monitor the fundamentals and the health of that escalator because, at some point, it's going to turn into the elevator down. Hopefully from much higher levels, after we've had a chance to exit.

It is a great day for 2 reasons. First, it's Jonah's birthday, so happy birthday, Jonah.

Thank you, bro.

Second, Bitcoin has given Jonah and me an amazing gift—and you all out there as well, an incredible gift. Trading right now at $120,000. Pretty insane.

Right.

Yeah, it's crazy. I mean, all the way up to—I think we hit a high of $123,000. We're selling off a little bit now, but what a rally this has been. Basically, we've gone straight up now for about a week.

Crazy candles.

Basically, ever since the last podcast, where we declared that Bitcoin never stabilizes at all-time highs and it was stabilizing at all-time highs, it just ripped higher. Good thing I didn't sell any calls. That would have been a mistake. This thing is going fast, and it feels like it's literally going to be an ice luge straight to $150,000.

1. Altcoins Next?

The question that I think everyone sort of has their finger on is that we've been talking on the podcast for a long time now about how basically nothing other than Bitcoin and some select coins are going to do well over the next 6 to 12 months. But I'm seeing a lot of chatter around people wanting to buy a lot of altcoins now. Everyone's like, “Okay, well, Bitcoin's gone on its run. Now it's time to just buy every alt that's ever existed.” What do you think about that?

I don't agree with that because I think these crappy alts are still backed by teams loaded with bags waiting to dump. And I think, just from a psychology perspective, the mentality of anybody who's bag-holding a lot of WIF, or bag-holding a lot of Cardano or any of our favorite coins to hate on—Polkadot—they're not under any illusions this time like they were in 2021 that the market is just going to keep sending those assets, right? I think that people will take profit if they're holding on to something serious.

Again, I'm not a subscriber to technical analysis, but it's been described to me a few times, and there's always some psychology behind the charts and lines and squigglies that people draw on these price-history charts. One psychological phenomenon that I've heard described before in the annals of technical analysis is that if a participant base has undergone some kind of trauma, they're going to sell the next massive rally, right?

Usually, there's some chartology around dips in those assets, and then the subsequent U-shaped recovery gets sold hard and there's a cap on it. You're supposed to sell rallies into those things. So I really believe that lore for some of these assets.

Nobody who's bag-holding a lot of assets that aren't going to participate in the crypto economy of the future—the revenue meta, whatever you want to call it—is holding any illusions this time that a new wave of retail buying is going to buoy WIF, Polkadot, name your crappy one.

One thing I'm starting to do is run screeners on the Sharpe ratio of the top 100 assets, just with some friends in the market. And I think the most negative ones are going to be a great sell versus Bitcoin after they do. I think everything will rip for a while, but I think those will be good shorts versus BTC after they've appreciated a little bit from here.

And you know what a very negative Sharpe means? It means there's just steady selling, right? Smooth, constant selling. I think those are the ones that you can look for to short versus Bitcoin, not versus USD. I don't know. What do you think?

Yeah, no, I'm in agreement there. Here's where I might differ a bit: I think Bitcoin has probably been outperforming some of the other good stuff as well right now. So I do think there's an opportunity at some points to chip away at your Bitcoin and rebalance a little bit. These things tend to go in cycles.

2. Why Here, Why Now?

Let's say Bitcoin hits $130,000 and HYPE is still at $47, which is very, very possible. What's been happening is that, on Bitcoin runs, everything pauses for a little bit. So why not sell a little bit of Bitcoin and rotate into HYPE? Why not sell—I mean, SYRUP's another one. SYRUP's paused a little bit. It's actually been down since Bitcoin started running. I think that offers an opportunity to rotate a little bit.

But I think in general, this is just going to be the Bitcoin rally. But the question is: why here? Why now? I mean, equities aren't really ripping. Gold's not really ripping. Why here? Why now, Jonah?

I have a good answer.

If you can't pinpoint a reason, it's hard to pinpoint a reason to sell, too, right?

I have a good reason. It's that money is too easy. You just have to look no further than the lagged comparison of M2 money supply versus Bitcoin. This is the part of the lagged M2 money supply chart that just starts hockey-sticking upward, and Bitcoin is following it basically tick for tick. I don't think it's any more complicated than that.

The debasement theorists saw this Bitcoin rally coming 10 miles away. We are part of that group of debasement artists, and we saw it coming and preached from the rooftops about it on this podcast, and lo and behold, it's taking off. Yes, there's some doubt about whether it would have started right now, in 3 weeks, or in a couple of months—you never know exactly when—but you can never know exactly when.

If you're looking for the chart, I guess I could share it. On the chart, Bitcoin is one line, and the blue line is M2 money supply.

You've got some very weird coloring there, Jonah.

I actually stole this chart from somebody on the interwebs. I didn't build it myself in TradingView, which is why it looks like this. So I tweeted it out. If you guys see any mistakes with it, obviously let me know.

But honestly, if governments print a bunch of dollars, those dollars go down. This is why oil is rallying when the fundamentals are terrible. This is why the euro-dollar has gone from almost parity to almost 1.20. This is why the S&P 500 is up when fundamentals are less than awesome. This is also why Bitcoin, the greatest debasement hedge since gold came along, is performing so well—and it's done this before. It'll do it again.

3. Ads (Kraken OTC, Katana)

The most encouraging thing about this is that if you look at the M2 money supply line and trace it against Bitcoin, it's kind of a straight shot to $150,000. Maybe I'm getting over my skis again, but I certainly don't see any reason to take profit here, especially given all of the profit-taking that took place around that consolidation level of $110,000. That selling's exhausted. We've ripped through a bunch of short liquidations, and now I think it's an air pocket upwards from here. There's not a lot of resistance.

The other thing is that the treasury companies just keep buying. Metaplanet bought another $100 million. Strategy was buying more. You saw the Saylor tweet.

Oh, dude. I have a story for you about that.

Freaking insane. And actually, you know what's nice is, for the first time ever, it looks like Saylor didn't actually buy the peak.

It's good.

Yeah. Crazy that they hold 600,000 Bitcoin.

Man, I mean, what? I've said it before, I'll say it again: I think it's too much. But one thing that I'll thank Saylor for is that he's given us the opportunity to go play this treasury company game. So, for example, today, BitMine Immersion Technologies is up 20%. They're the ones that are buying and buying Ethereum.

So, if you want to make a bet—if you want to make a bet on ETH—this is probably a good levered bet that you could try to take out, BMNR. I don't own any because I don't like betting on ETH.

But who would anyone bet on ETH here? I don't understand it.

But it's also betting on a little bit of euphoria in the markets.

You're actually probably better off finding returns in the public markets right now than in an alt, in things like this. I mean, this is like—they're pulling altcoin-like moves now. A Hyperliquid treasury fund is basically a MicroStrategy-like instrument for Hyperliquid. I saw some charts on X. I didn't verify it in TradingView, but it looks like it's up 100% to 200%—just another treasury asset for these things. Everybody's doing it, and I frankly can't understand why. I was walking just earlier—

Late last week.

Hold on. So, just to clarify, there's—I don't know if this is the one that you're talking about—something called Sonnet BioTherapeutics Holdings.

Yes, that's the one. And it tripled after it announced that it was going to be merging with somebody to go buy Hyperliquid.

What's actually kind of interesting is that a lot of these types of companies are coming out of dead biotech companies. There's so much value in these dead biotech companies now that they should probably just go scour for any biotech companies that can be bought for cheap.

The way that this happens specifically is that normally they're a 1-drug company. So, a 1-drug company will go public, and they're going to try to get their drug passed by the FDA. Then their drug fails trials, and the company kind of dissolves and just ends up becoming this shitty little holding company forever. Maybe nothing really goes on with it, and what they try to do is find a buyer for the shell because there's some value in that. Some of them just end up doing this now because it seems like the best place to sell out for these guys.

You know, I've been waiting for the moment when we pivot the 1000x podcast from crypto to shilling pink-sheet equities.

I don't know.

I think we may have just crossed the Rubicon here with your last comment. I kind of would like to do a Wolf of Wall Street episode where we just shamelessly—obviously not financial advice—shamelessly pretend to shill these horrendous shell companies in the hopes that they go and start accumulating Hyperliquid and 3x overnight.

I'm just saying, I don't do this. I don't own any of these things. I'm not profiting off of these treasury plays, except for, you know, hopefully one day Ripple will go public because I own a big chunk of Ripple equity.

Other than that.

I'm not profiting at all off these things. I'm just looking for ways to do it in a smart way. I haven't, and one of the ways that I thought about maybe potentially looking into it was looking at all of these dead companies and kind of making a bet that they're all going to sell out one by one. It's not a bad take.

Honestly, in all seriousness, I was joking about the Wolf of Wall Street stuff. In dead seriousness, I do think we need to monitor the treasury company situation. Just like all of these treasury companies are buying right now at the same time and it's pumping our bags, they will all sell at the same time too. And as we talked about in previous episodes, the commodities saying “escalator up, elevator down” will apply to the price action here.

They're all buying; it's steadily rallying. When they all want to get out and rush for the exits at the same time, there is going to be a red candle for the ages. So we do have to monitor this. It is absolutely a sign of froth. I don't think it's cause for concern just yet.

But I was about to tell you the story. Even last week, I was just taking a stroll with a friend of mine in the south of France. He normally lives in Paris. He's a private-equity guy and kind of a SPAC artist, a SPACer.

I was like—you know, he was like, “Wow, Bitcoin, on the move again.” I was like, “Yeah, what are you doing about it?” And he's like, “Well, we're putting together a MicroStrategy-like entity for the French equity market, the French stock market, just to give investors who don't want to open up wallets access. They don't have access to U.S. ETFs. Sometimes French people are very nationalistic and a bit risk-averse.”

Did you say sometimes, Jonah?

Yeah, fair enough. The French are always nationalistic and risk-averse, so why not create a Bitcoin treasury company that copies MicroStrategy? Literally everybody's doing it.

We're on the escalator up right now. We need to monitor the fundamentals and the health of that escalator because at some point it's going to turn into the elevator down, hopefully from much higher levels after we've had a chance to exit. But for now, with our fingers on the pulse, so far so good, I guess.

4. GBTC Comparison

Worrisome signs would be cracks in the economy that fracture the ability of these companies to obtain credit, or, possibility number 2, a crazy sell-off in the price of Bitcoin. But you have to underwrite something when you're long this stuff, and I'm willing to take the risk that we're not going to get an exogenous Bitcoin-related crash that has nothing to do with the rest of the markets. I think it's going to be a broader macro-contagion thing that catalyzes the treasury company unwind, not the reverse.

One thing that happened with GBTC that's relevant to this is what happens once the threshold is crossed. For those of you who don't know—I assume most of you do, but for those of you who don't know—GBTC was the fake ETF-like product that traded on OTC markets that Grayscale issued. You could deposit Bitcoin and get issued shares; the shares would be seasoned after 6 months.

Generally, why people would do this back then—like 5 years ago, in 2020 and before—is that because the product traded on the public markets, you could buy it in your IRA and you could buy it in your 401(k). So it actually traded at a premium, because it was also the only way your average retail investor could get access to Bitcoin. It would trade at as much as a 100% premium; it was averaging 30% to 40%.

People were like, “Okay, this is a brilliant trade. What I'm going to do is put my Bitcoin in, wait 6 months, and then sell my Bitcoin for a 40% profit and just rebuy my Bitcoin, now with 40% more Bitcoin.” This was a great trade for a while, and it worked until Three Arrows Capital decided to lever it up like crazy and blow up the entire ecosystem.

They blew it up because it was already trending in that direction. I think they hastened the fall. But basically, GBTC started trading at a discount instead of a premium. There were so many people that did this and created so many shares of GBTC by depositing their Bitcoin and doing the trade. The more people that did the trade, the less attractive the trade became.

Basically, what I'm trying to say is that once you cross the threshold of, “Oh, wow, so many people have done this. Now it's actually going to trade at a discount because everybody's doing it,” the entire thing unwinds, and a lot of people get hurt.

The way that I think about this is that the more treasury companies that are created, the lower the discount should be on all of them because there are more options to go around. You don't have to buy this thing if you want access to the treasury play. I think, in aggregate, all discount rates on treasury companies should go down the more treasury companies there are, assuming that all of the treasury companies are managed equally effectively. That's a big assumption, but I think it's actually fairly reasonable, given that it's not that hard to manage a treasury company. You just raise money and buy Bitcoin.

5. Treasury Pair Trades

Funny when you put it that way. It's like, wow, all this financial wizardry and genius. It's like, no, you just raise money and buy Bitcoin.

You sell your stock at the highs. You issue convertible debt, and then you buy Bitcoin with the proceeds.

But you know what's crazy, Avi?

I was reading online again—I haven't had the time to dig into this yet. There's a lot going on in this rally and a lot of information to process, but I'm reading that Bitcoin treasury companies in Germany are trading at a discount to NAV.

Obviously, in the U.S., they’re trading at an incredible premium, which I still can’t fathom. I agree that all of these inefficiencies will eventually converge. For eagle-eyed investors, there are probably some pair trades to put on if you want a delta-neutral bet on the space that’s kind of crypto-adjacent, but not necessarily just more Bitcoin length.

6. When to Take BTC Profits?

Maybe if you’re maxed out on that but want to extract a little alpha, you can probably buy the cheaper treasury companies versus shorting the richer ones. Hopefully, they collapse kind of like Coinbase and Circle. There are all these little alpha opportunities across the board. I think pair trading is going to become the new thing to do once things stabilize. But for now, there’s just so much money in being long Bitcoin that the goal is literally just not to get knocked off the mechanical bull. You just have to keep riding it somehow and not get stopped out. I think maybe if things hit $130,000, $140,000, or $150,000, it’s worth diversifying, but not until then.

So, you would consider diversifying around—I think your target has been $150,000 for a long time. Let’s say we get to $150,000 in the next month. Are you taking some off?

That depends. One thing I’m really focused on is MVRV Z-Score. Let me pull up the chart and share it. This has been my exit metric. People who listen to this podcast frequently enough will know that I’ve been resoundingly bullish from the lows because we started the podcast on the lows.

I don’t want to be the guy who’s like, “I remember, I got shouted at at Goldman one time for having a consistent view over a long period of time.” The head of the commodities floor came out and went after me one day when I was having a bad P&L day. He was like, “Jonah, even a broken clock is right twice a day. You have to adapt.” Yes, it’s true—you do, but this is one of the greatest megatrends in my lifetime that I get to ride. I’m not going to try to reposition myself and convince others to get long and short and long and short all the time on this ridiculous track.

We started shilling GBTC—not as financial advice, again, but just as an idea—when it was trading at a 25% or 30% discount and Bitcoin was trading around $20,000 or $22,000 or something.

Yeah, we nutted on that trade.

That was an amazing one. We basically got long BTC at $15,000 or $17,000, and anybody who listened to us did too. When I left Cumberland, I just replaced that risk in my PA, and it’s now, without any question, the best trade of my life.

Basically, this is the train to ride, but you have to have an exit metric. I’m not just pounding the bull drum without thinking about it, because that’s stupid. MVRV Z-Score—you have to pick something, and I think MVRV Z-Score is the best one. Let me try to share my screen again. I’m just pulling up the Bitcoin Magazine Pro MVRV Z-Score chart because that seems to be the easiest one to look at here. Some of the other ones are paywalled.

Here’s the Bitcoin Magazine Pro MVRV Z-Score chart. You should read the description in detail to get a sense of what it means, but basically, MV stands for market value, so it’s basically just a market-cap-type thing. That’s in the numerator. The denominator is RV, which is sort of like a metric that incorporates where it was last spent on average across the entire market cap.

When the market cap is too high versus where people got in, where it was last spent, that’s a top signal, and vice versa toward the low. Z-score just means that it’s scored by standard deviation, as opposed to the absolute ratio of MV to RV. This thing is amazing at predicting cycle tops. The disclaimer to that is that we don’t have a statistically significant number of cycle tops and cycle bottoms in the past for this metric to be a definitive indicator of tops and bottoms. For me, it just augments my gut feel for things. I think when this thing gets above 5, or even above 4, you’re supposed to start getting nervous.

You can’t really correlate that with the price of Bitcoin because it’s a ratio, right? If tons of buying occurs on the highs, the score stays low. If nobody touches it and the price just sends to $200,000 a token, then this ratio will shoot up pretty quickly. The ultimate takeaway here is just to monitor people’s entry prices in something that’s normalized, like a Z-score metric. I use Bitcoin Magazine Pro MVRV Z-Score. If that thing gets above 4 or 5, maybe it’s time to de-risk a little bit.

If not, I don’t really see a reason to de-risk before $150,000. At Goldman, on the market-making floor, there were 2 types of orders. You could have a limit order that somebody would give you, or a call level. A call level is just like, “Hey, day or night, this structure that I want is trading at 170 right now. If it gets to $200, call me so I can just make the decision on the wire. Don’t execute it on my behalf, even if I’m sleeping.”

7. Ads (Kraken OTC, Katana)

Basically, $150,000 is like a call level for me. It’s a time when I will set aside other things that I have going on in my life to dive deep into my book and my positions and Bitcoin, and just reevaluate the things that I studied to convince me to get into this position in the first place. Basically, the number-one thing I’ll look at is that chart. If it’s just tons and tons of fresh capital buying on the highs and that metric is still low, I’m safe.

One thing about this: I think data sets have changed a lot over the last 2 years, even because of the institutionalization and the ETFs. One thing that I’ve actually been on the hunt for is trying to figure out what data sources and things that I used to look at maybe I shouldn’t look at today. One of the things I’ve found that has started having problems is a lot of on-chain metrics.

On-chain metrics started having a lot of problems because coins were becoming a lot more centralized. These people, like Coinbase, will sometimes do these massive moves of Bitcoin just because they’re reshuffling their storage systems, testing security, or doing this or doing that. So I think 4 or 5 years ago, a simple metric like this was probably okay. But today, I think you probably need to find a way to strip out some of that noise.

Yeah, you’re right.

Right. It’s very possible. If you look at it since 2023, it really has not behaved in a quote-unquote normal pattern. If you look at the rest of it, going all the way back to 2012, there were these sell-offs and then these massive parabolas, and now this is a lot more choppy with a lot less excess in it, which could indicate that it’s working perfectly and it’s just telling you that the market’s super healthy, or it could indicate that the metric has changed, and I don’t know.

I don’t know the answer, but it’s just something—critical thinking, I guess.

No, you’re absolutely right. I could certainly fabricate a backstory where the metric is functioning just fine, and the reason why it’s kind of ranged despite Bitcoin taking off is because new participants just keep lifting the highs. Another explanation could be that the metric should be at, like, 8 right now, flashing “sell with both hands,” but because Coinbase keeps moving tens of billions of dollars’ worth of Bitcoin back and forth between its cold wallets at current market prices, those UTXOs are registered as fresh transactions even though they’re not, and then the data is totally bogus.

It’s a really good point you make.

Whatever you guys have thoughts on, we want—we’re eager to debate them, because there is no right answer, right? We have to figure this out together as a community for now.

Yeah, I am a little sad. I figured back in the day—when I say I’m sad, I mean sad about how things have changed—that there was nostalgia. There was so much innovation on the Bitcoin metrics front, and now I feel like that’s really—it’s really slowed down. People are probably not as interested in doing that anymore.

I do feel like the average intelligence of a crypto person has gone down pretty significantly, to be completely honest. It’s all suits now—

Podcast hackers.

But anyway, I must be missing a bucket. I’m trying to think of some other on-chain metrics, longer-term metrics. One thing that I like to look at personally, actually, is this guy who made some pretty good metrics way back in the day. This guy is Cuban Tobacco. I don’t know where he is today, but I talked with him a while ago to really understand what I was looking at.

You can basically just think of it as extended Bollinger Bands. You can see how Bitcoin is trading relative to previous price action and where you should start getting a little bit nervous about Bitcoin. Let me show you guys what I’m looking at here. Can you see this?

Yes. Okay.

You can basically just take a look and note that every time we get really deep and extended into these red areas, we tend to have some level of pullback. It even happens down here. The one exception to this was in 2020, whose rally was pretty nuts: 17 to 65.

We spent an extended period of time here, but even then, every time we got to the tops, we’d have some sort of pullback. This time, I’m looking at $137,000 to $158,000. This zone, I’m definitely going to be taking some off because I think we’re going to be extended a bit.

Are you going to be taking it off for the long run, or taking it off to rebuy it 10% to 15% lower?

8. When is BTC Fairly Valued?

I’d be taking it off for the long run, because at that point, we’re reaching rarified territory, Jonah. I mean, $120,000 per Bitcoin is fucking nuts.

My thesis on Bitcoin from the beginning—and maybe I’m just not updating my mental model fast enough right now—but gold’s total market cap is what right now? $22 trillion?

$22 trillion. Yeah.

Bitcoin’s total market cap is what? It’s like $2 trillion to $2.5 trillion now?

Yeah, $2.4 trillion.

So we’re about 10% of gold’s market cap. I always thought that we could do basically 10% to 25%. Ten to 25% of gold’s market cap makes a ton of sense to me for Bitcoin to start maturing at these levels and start behaving a little bit more like a normal asset, not one that just radically outperforms in all contexts, because a tremendous amount of Bitcoin’s outperformance is the fact that it’s still under-owned.

Now I’m trying to update my priors here, because Bitcoin is becoming a lot more important than even I think I would have been able to imagine 7 or 8 years ago. I do think that maybe we can get to 30% to 50% of gold’s market cap now.

But as a trader, one of the things that I always tell myself is that if you’re lifting up your targets as you reach them, even on a decade-long, multi-decade-long trade, you’re probably doing something wrong. I just think this is an insane thing to think about: an 8-figure “Where could Bitcoin get to?” idea is fast approaching. It’s something I’m grappling with right now.

At what price does Bitcoin become fairly valued to you? The answer could be—

Never.

Because you might say, “No, we’re just going to print money, and Bitcoin’s going to go up because we keep printing money.” But I think at some point everyone here has to understand the reason that Bitcoin does so well relative to all other assets and destroys the Nasdaq, destroys the S&P, and destroys all these things is because it’s under-owned and not accepted in the same way that all these other things are.

At some point—whether that’s $150,000, $250,000, or $500,000—it starts to act like a normal asset. That’s my personal opinion.

No, I think that’s a really sobering take. Maybe because I’m so bullish, my pushback on that take is just cope. But let me bring up a couple of things.

The first is that gold is a moving target. It wasn’t so long ago that the market cap of gold was $10 trillion. Now it’s $22 trillion, right? So it’s entirely possible that you could be absolutely right.

That the absolute maximum market cap—your prior assumption that Bitcoin could be 10% to 25% of gold’s market cap—that could be totally right. Maybe Bitcoin will never surpass 25% of the market cap of gold, but gold just keeps ripping.

Mhm. Bitcoin at 10% of the market cap of gold is kind of the bottom of your 10% to 25% range. But once it starts doing that, then I think it’s acting like a reasonably normal asset, right? It’s acting like a—

Yes. But it would be on the bottom of your range at a time when dollar-debasement hedges are going up. So you would rather own Bitcoin than gold because it’s at the bottom of your range.

Maybe you sell it when it’s in the middle of the range, like 17% of gold, and you pivot to gold, or rotate some of your assets to gold, if you’re just worried about dollar debasement. So I would actually buy into rotating Bitcoin into gold as a way to de-risk Bitcoin rather than rotating it into dollars.

But let me bring up a couple of other frameworks. A lot of people—and not stupid people either, like Brian Armstrong at Coinbase—will tweet about this. A lot of people think Bitcoin should flip gold, right? It should be worth at least the market cap of gold, if not greater, because it’s digital gold. It’s just easier to transport, right? It’s easier to move money around.

Maybe in an era of capital controls, you’d rather have a thumb drive than a gigantic, uncarryable sack of gold if you’re a nation-state trying to move money around. Equally, even crazier people think that Bitcoin will eventually supplant the dollar and become the global reserve currency, with the market cap of the dollar.

I think that’s a bit nuts, but I think flipping gold is on the table—maybe a 25% chance. So instead of just saying Bitcoin should be X at Y% of gold’s market cap, we could do a probability-weighted analysis. It could be a 2% chance over a 10-year time frame that Bitcoin flips the dollar, a 10% chance that Bitcoin flips gold, and the remainder is 20% of gold or something.

Where will gold be in 10 years after all this profligate money printing? If you were to just take that expected value, Bitcoin is probably looking at maybe—I’ll do it and tweet it out—just making a Google spreadsheet, like a really stupid toy model that you can play with. The expected value of Bitcoin is still probably way above $150,000 in any of those scenarios, or in the aggregate of them—a probability-weighted aggregate of them.

To me, I’m more worried about that. The MVRV-Z metric is 1 input into my mental model. Another input is: how will I feel if I sell Bitcoin at $150,000 when BTC is still just tracking the M2 money supply? It’s basically pricing in things that have already happened on a lagged basis, Powell is still in the seat, and rates still haven’t been cut.

We’re less than 1 year into the Donald Trump, pro-Bitcoin, everything-is-for-sale, capitalism-on-steroids presidency. How would I feel then? I’d feel kind of fear of missing out, and maybe that’s stupid.

But discussing it with you, I like the idea of diversifying—selling Bitcoin to buy gold—not selling Bitcoin to buy U.S. dollars, which I hate. I think the dollar is going straight down for the foreseeable future. I don’t want any dollars in my portfolio.

I want stocks, real estate, Bitcoin, gold—anything that holds its value against the dollar. I think that’s what you have to look at diversifying into. The other question is: do you diversify into all altcoins with potential? We’ve mentioned Hyperliquid and Syrup a bunch of times.

9. Ads (Ledger)

I don’t think we’re going to get a broad-based altseason, because there were too many coins a year ago, and there are even more coins now. I don’t think we get a broad-based rally. It has to be somewhat targeted. Otherwise, where’s the money coming from, and why and how? It just doesn’t make any sense to me anymore.

I don’t want to discount the fact that there are actually reasonable arguments for Bitcoin. I wrote an article 4 years ago about de-dollarization, how I thought the dollar was likely to get hit pretty hard, that there was likely to be some sort of balkanization among currencies in the world, and that we would see reserve assets get more spread out. I think that has happened to some capacity.

So I do think there’s some take here that, okay, instead of storing your money in the dollar, euro, or yuan, 10 years ago you were basically saying, “I’m going to store my money just in the dollar.” Today, a lot of people actually have cut down on their dollar exposure. Definitely, people in Asia have cut down a lot on their dollar exposure and hold more of a basket of stuff. In the US, you hear people talk about the idea of simply holding your wealth in the S&P: don’t hold your wealth in dollars anymore.

So I do think there’s some argument that Bitcoin will eat up a portion of that wealth storage and actually end up cannibalizing the position of gold completely. I’m sympathetic to this argument. I just think that process would take a very, very, very long time. Extreme volatility from Bitcoin—let’s say if we trade from 150 back down to 100—would delay the process by another 3 years.

Yeah.

But 3 to 10 years. I don’t know what I really think. I probably need to spend more time on this. My target has always been that 10% to 25% level of gold, and it’s crazy that we’re here. As a trader, I take off when I get to my targets.

Yeah, that’s good discipline, and I like that. This is basically why I like talking to you, right? We have 2 very different perspectives. You are the ultimate contrarian trader: you got into Bitcoin, and you threw your entire life behind Bitcoin when it was the biggest joke asset that kind of had a mega-cap. You went all in on it at a time when everybody else was probably laughing at you and looking down on you for doing so. Equally, now that everybody’s getting greedy, you’re doing the Warren Buffett thing and starting to allow yourself to be a little bit fearful and talking about—

I think I do have to fight you. I think we all have to fight back against those impulses a bit. I think they haven’t served me well over the last year or so, either—the contrarian impulses—because I’m good at identifying opportunities early and finding things that are very uncomfortable to be in. That’s been very good for me in general, in my life and my career. But we are entering into a transitional phase, right?

This is the mainstream adoption phase. I guess one way of putting it is, it’s like trying to be contrarian about Facebook after The Social Network came out.

Yes.

It’s like, all right. Facebook’s got to be peaking now. It’s done so well and made a lot of money. Nobody believed in me. I invested in Facebook, but now they made a whole movie about it, so I guess it’s time to get out. And then Facebook proceeds to rip faces even harder for 15 years and continues to rip face today.

Yeah. So there is that aspect of it that I’m cognizant of.

This is why I’m glad we’re having this conversation here, sort of in the open, and trying to do this in public, because I have a very different set of experiences from you. I’m not a contrarian. I’m a trend rider. I’m just going to go back to my well with a couple of anecdotes from my experience.

The first is, I bought Facebook stock at $19 because, at $19 a share after it tanked on the IPO, I had firsthand experience with it. It was my generation. I went to Columbia, we got it second, everybody I knew was on it, and I knew people. I had 1 degree of separation from people who were inside the company. Actually, I knew some early employees as well.

I was talking to them, and they were telling me, “Oh, this is crazy. Every day we’re getting more views than the Super Bowl. We’re growing at these insane compound annual growth rates. It’s wild. Nobody’s ever seen anything like this in human history.” I just remember thinking, “Okay, I’m going to take a YOLO here.” So I took a lot of my money when I was in my early to mid-20s and put it into Facebook at $19 a share. I sold it all at $30 a share after I made a 50% profit—whatever, 55% profit, whatever that works out to. I was patting myself on the back, and now it’s trading at more than $700 a share. Obviously, I’m the fool, right?

Another thing that had just happened was the 2000-to-2008 commodities supercycle, when China was buying everything and commodities were just trending upward. It was like, “Is this the new asset class?” It was the Bitcoin of its time. People who never would have even dreamed of buying into metals and energy commodities were buying oil and natural gas, gold and silver, steel and copper, and everything else. So there was that supercycle that had just happened.

And then the final thing is, you learn this when you trade time spreads: front-month oil, like March natural gas versus April natural gas, or September crude oil versus October crude oil at WTI, which used to be constrained. When there’s a constrained, bottlenecked system, you can get a parabolic move because there’s literally no clearing price anywhere near the current midmarket where you’ll find a seller. There are just buyers looking for storage space or whatever, or looking to sell. There’s some crazy thing that happens on expiry, like when WTI went negative in bottlenecked systems. In commodities, this is the saying: 80% of the profits come from the final 20% of the move in time spreads. It’s been trending for 8 months, and the final 2 months make 80% of the profits, or something.

So, basically, with all 3 of these stories coming together, as a commodities trader, I ask myself when I look at Bitcoin: Is this a supercycle where there’s broad-based global adoption of the commodity? Yes. Number 2: Is this something like Facebook that could just run for years as society adopts it? Yes. So far, we have 2 boxes checked. Third: Is there some crazy bottleneck? I haven’t really answered that question yet. I don’t know how much Bitcoin is available. Certainly, MicroStrategy and Satoshi don’t seem to be selling, right? The big bags—the big long-term holders—aren’t selling. So I think we’ve got 2 out of 3 commodities-trader boxes checked for, yes, this thing can run another 10x from here.

10. Final Thoughts

Ultimately, maybe while I was on this rant, I came up with an on-chain metric we could talk about: coin flow to and from exchanges. I think if you start to see giant bars on that chart of coins getting sent to exchanges from long-term holders—if Satoshi’s coins start to move, or if the big wallets start moving coins to exchanges—maybe that’s a sign to buy puts or get out of the way, or short altcoin junk against your portfolio just in case. I think that could be a good on-chain metric to monitor because I don’t really see a way that one gets doctored or becomes irrelevant. It’s pretty transparent.

Jonah, I always love your rants, and I especially love them when they include shorting altcoins, because that’s my favorite thing to do in the world: short these horrific things. Honestly, the next few months may give us some great entry points for shorting the stuff, like World. I wouldn’t touch anything right now. In fact, right now, I’m probably more inclined to buy trash than I am to sell it. But there will come a day when you will get on this podcast and you will hear me talk about how this is the best short of a lifetime, and you should take it.

But until then, I will leave you with this: let’s enjoy this bullish ride.

I know you’re enjoying it.

Yeah.

I really enjoyed this conversation, man. Let’s drink. I’m certainly going to be drinking tonight. It’s my 40th birthday. I’ll see you soon, buddy. Have a good one.