Speaker 1In Paraguay, 60% of people lost their money as the number one bank, collapsed overnight. Do you think that could happen in a place like America?
Speaker 2Everything at a bank is a claim because they can freeze it, they can lose it. At some point, people will realize it's just a Ponzi, it's having a bear asset. You can't freeze it, you got to go there. Being in Wall Street for 30 years jades you because you realize it is an insider boys club. You know, I still don't trust BlackRock. They're recognizing that they're going to lose the $70 trillion that's transferring to the next generation. Bitcoin's a big time threat to the people who hold control, big time. You shake the money tree, you disappear. A lot of people say, why is Bitcoin just stalled here? I would flip it and say, how the hell is it still up?
Speaker 1All right, Mr.
Speaker 2Mike Willis, how are you doing today? Great. Good to see you, Rob. Thanks for having me.
Speaker 1Absolutely. So you have over 30 years of experience in these markets. And this week we saw a tsunami, a blue tsunami take over Washington, D.C. as the Democrats gain control over both houses of Congress. And then the market has sort of had a tsunami of itself going up and down in crazy directions. So let's start with the politics in terms of Washington, D.C. What happened with the elections? What was your initial take when you saw the news?
Speaker 2You know, I do as a true Bitcoiner, I do try to tune out politics. There's a side to me that believes it's just a puppet show. It's theater. And there's a right wing and a left wing, but they're they're from the same bird. And I think, you know, growing up, I was very political. As I became a Bitcoiner 10 years ago, I became more libertarian. And so that that kind of takes you out of the the bipartisan system. When you once you go libertarian, you're just basically looking at things. Instead of left and right, I look at things more vertical. So you have the haves and haves nots. You have the elites in control versus the plebs. Those are the directions I like to look, because I think a lot of this left to right stuff is noise. And in the end, yes, divided government will slow crypto legislation, but Bitcoin's investment. Case is party neutral in the end.
Speaker 1Yeah, it definitely is. Nothing stops this train. They are going to keep printing no matter what, no matter what, who is in power. The national debt always goes up. And I agree. I think many Bitcoiners see it like you do, that it's the the powerful versus the regular citizen and that Bitcoin allows the regular citizen to regain some of their own personal sovereignty. But over the last two years or so, we've seen Bitcoin sort of get politicized, right? Trump was the. Crypto president, if not the Bitcoin president, but some of that hasn't really played out. What was your take on the last two years of having a quote unquote crypto president?
Speaker 2Yeah, as strongly as I will say that politics is theater, I will also. Say that three years ago, the US government was the biggest risk to Bitcoin and then. When the new administration came in, Gensler stepped down. We got a new commerce secretary, new Treasury secretary, new CFTC, you know, all pro crypto. And of course, Trump promising to be the strongest pro crypto government in the world, that was a massive shift. So I'm not trying to say governments can't make a difference because they can they can definitely stand in the way of a Bitcoin progress. They can definitely slow things down. Sometimes the slow, the slowing down of something speeds it up because people get upset. So I think I'm I was pretty excited about what I saw in my reaction to the new administration coming in. Gensler sitting down, you know, Gensler basically sent Wells notices out to anyone with crypto in their name. And I don't think people remember, but they were suing Coinbase for, you know, issuing or allowing securities to be traded on their transacted on their exchange without a license. And all of that went away when Gensler stepped down, Trump came in, we had a new SEC chair, new commerce, new CFTC chair. It was a huge difference. So I don't want to minimize the fact that politics will play a role, but from a purist standpoint, the investment case for Bitcoin stands apart from governments. Bitcoin is citizen sponsored money. It was not sponsored by a government. Of course, it's going to threaten their power. Money is a huge part of government power. They love fear. They love wars. They love big debts. Why? Because all of those things create reasons you need your big friendly government on your side. And but when you peel back the layers, it's not so friendly. And so I think a lot of Bitcoiners, what we what we realized was we can't rely on government to fix money. We can't rely on them to fix the money, fix the world, I believe, is real. And I think I spent my life learning money, spent 30 years trading. But I mean, I learned money. I grew up poor. I want to know how money works. I had clients asking me 25 years ago, tell me about the Fed. Is it a public or private entity? Who audits it? learning money spent 30 years trading but i mean i learned money i grew up poor i want to know how You know, who are they? And you know, I'm a I was a Wall Street investor. You know, I'm not a real estate investor. money works i had clients asking me 25 years ago tell me about the fed is it a public or private entity who audits it you know who are they and you know i'm a i was a wall street kid growing up i loved it you know just loved the concept that you know a small fry like me could own a million dollar company and i didn't have to have a million dollars i could just own a share so i loved wall street you know and i defended it as long as i could um but being in wall street for 30 years i can tell you jades you because you realize it is an insider boys club um and it's not an even playing field which i think um is one of bitcoin's long um one of bitcoin's strongest
Speaker 1suits yeah and And you bring up the fact that if you study money, then you realize that when it's created out of thin air, fiat, like a government can do, there's problems that go along with that. And Bitcoin's goal, many Bitcoiners believe, is to separate money from state. But it was kind of suspicious when the government sort of just flipped, right? As you said, they were originally fearful of this thing, and then they're like embracing it. So were you suspicious of that embracing of Bitcoin by the government who Bitcoin could hurt in the long run?
Speaker 2For sure. I still, you know, I still don't trust BlackRock, you know, all of a sudden BlackRock's behind this, you know, and there's a use case for it, you know, they're recognizing that they're going to lose the $70 trillion that's transferring to the next generation. And Xers and boomers, they're different. The millennials and the new breeds, they don't care about asset allocation. They don't care about meeting their broker face-to-face and if he's wearing an Armani suit and looks like he's popular. And it could be that BlackRock was realizing that they were going to, they're out of touch with the next generation. And when all their clients start passing their money on to the next generation, they're just going to leave and go to Robin Hood or wherever, Weeble and all the other places. So, yeah, that could be the play. And I hope that's what was going on there. But I do have some theories on why Wall Street changed so quickly. And it's not all just because the use case was finally seen. You know, I do think if you fight something and then if you can't fight it, you have to try to control it. So I think there's that aspect.
Speaker 1So then let's dive into that. Do you think BlackRock has, say, gotten more control of Bitcoin since the launch of the ETFs back in January of 24?
Speaker 2For sure. I mean, they went from hating it to leading Wall Street in it. And it's been such a successful, iBit's such a successful ETF from an asset center management standpoint. I don't know of any ETF that's ever done that before. I don't think there has been one, but, you know, Bitcoin broke all records. I see Bitcoin as three waves and the first wave is the unregulated wave and these were the early adopters and pioneers and they didn't care that they found Bitcoin on some exchange. exchange unregulated exchange in some weird ass place in fact they preferred that it wasn't regulated by the sec um and they they figured out public and public and private keys and digital wallets and and how to do everything and a lot of those guys were cypherpunks anyway and they understood privacy and where this was going so they were all in from the start and then i mean that's a 15 year period there a trillion dollars comes into bitcoin then the second wave is the regulated wave that started three years ago when blackrock flipped and all of a sudden you know the sec approves the etfs um you can buy bitcoin through a brokerage account regulated exchanges regulated brokerage accounts kyc that's the second what i will call the second wave and um the third wave i believe is is uh institutional adoption it's the 30 trillion dollars that financial advisors are the gatekeepers of um they still haven't started recommending bitcoin yet they're just barely starting to look at it i think still pretty early on that wave um but i do think i i do think bitcoin's here to stay i i yeah all of this division in in washington will slow things down certainly but in terms of in terms of bitcoin as a bitcoiner we never thought the governments would be behind this anyway you know so the fact that one party's for it one party's against it or how much are they against you know two to one they're making it a a bipartisan you know a partisan issue um you know i think if trump wasn't in office i think you know some of the democrats would relax um you probably have more of a bipartisan um but because it really shouldn't it should not be a partisan thing but i will say with that said um bitcoin's a big-time threat to the people who control big time money is the the root the money is the root of the problem the money is the root of the root the money tree you don't shake the money tree you shake the money tree you know you disappear so then i just want
Speaker 1to stay on black rock for one more question uh you've been on wall street for over 30 years you've of course dealt with black rock and so then larry fink comes in and he's saying good things about bitcoin and bitcoin are sort of flip on him right they they go from him being an arch nemesis to being oh he's he's one of our mascots now you know he's on the level of michael saylor um tell us what was the reputation of black rock as you're on wall street and why do you say that you distrust them
Speaker 2so i worked for the wire houses for many years um black rock goldman sachs are basically the two giants that that run everything i really looked up to to goldman sachs because i always wanted to work for them um so between black rock and goldman sachs you know those two are probably the two most successful um investment operations on wall street and influential so when you see the president back blackrock really defending bitcoin after you know years of bashing it it does raise red flags in my head on you know what what's actually going on there um and certainly bitcoiners have a lot to be concerned about because frankly um and what we saw as soon as bitcoin futures got approved like I think down to the day they got approved on the cme bitcoin tanks you know um seven years ago whenever that was and um and so then you know bitcoin gets into etfs and basically does nothing um or at least bitcoiners think it's doing nothing it's actually doing quite well it's just not going up quite as fast as bitcoiners had thought it might but it's doing quite well and and I I think it will be undeterred here um what's blackrock's reputation I I think um I think it's just because um it's a good old boys club I don't like uneven playing fields I like we all have to play by the same rules um so I don't have any personal experience with black rock that I can tell you about um it's just um difficult for me to imagine black rocks all of a sudden pro bitcoin um it's just um difficult for me to imagine black rocks all of a sudden pro bitcoin and with the addition of these
Speaker 1and with the addition of these and with the addition of these institutions like black rock uh Fidelity institutions like black rock uh Fidelity institutions like black rock uh Fidelity and others issuing these etfs and of course and others issuing these etfs and of course and others issuing these etfs and of course the treasury companies as well many the treasury companies as well many the treasury companies as well many bitcoiners are afraid of paper Bitcoin bitcoiners are afraid of paper Bitcoin bitcoiners are afraid of paper Bitcoin that's uh people are buying Bitcoin on an that's uh people are buying Bitcoin on an that's uh people are buying Bitcoin on an exchange or through a company and they're exchange or through a company and they're exchange or through a company and they're not buying the real asset itself uh and not buying the real asset itself uh and there of course that means the price is there of course that means the price is there of course that means the price is being suppressed do you think this is a being suppressed do you think this is a being suppressed do you think this is a real issue that people should be real issue that people should be real issue that people should be concerned about
Speaker 2concerned about concerned about yeah for sure yeah for sure yeah for sure um I don't know about the float argument um I don't know about the float argument um I don't know about the float argument but I will say I mean just think of futures but I will say I mean just think of futures but I will say I mean just think of futures is a great example and it's part of is a great example and it's part of is a great example and it's part of the way they control the gold market the way they control the gold market is if you can transact in Futures and is if you can transact in Futures and is if you can transact in Futures and never settle never settle never settle you can literally be trading a hundred you can literally be trading a hundred you can literally be trading a hundred times the gold market times the gold market times the gold market and not necessarily affect the price and not necessarily affect the price and not necessarily affect the price so so so Bitcoin was supposed to do away with Bitcoin was supposed to do away with Bitcoin was supposed to do away with that but once you have Bitcoin future at that but once you have Bitcoin future at that but once you have Bitcoin future at least with Bitcoin Futures it certainly least with Bitcoin Futures it certainly least with Bitcoin Futures it certainly is all paper is all paper is all paper um because um because um because there are no coins being owned there there are no coins being owned there there are no coins being owned there so so so there are definitely instruments on Wall there are definitely instruments on Wall there are definitely instruments on Wall Street that create paper Bitcoin and Street that create paper Bitcoin and Street that create paper Bitcoin and what I call paper Bitcoin is let's say I what I call paper Bitcoin is let's say I what I call paper Bitcoin is let's say I mean look at Beto um ETF bito 100 mean look at Beto um ETF bito 100 mean look at Beto um ETF bito 100 Bitcoin futures so last I looked at like Bitcoin futures so last I looked at like Bitcoin futures so last I looked at like two billion in assets so that's two two billion in assets so that's two two billion in assets so that's two billion dollars worth of Bitcoin demand billion dollars worth of Bitcoin demand is being held, not in Bitcoin. So certainly that affects the price. And depending on how many of those investment vehicles exist, where you can satisfy somebody's Bitcoin scratch without buying Bitcoin, then, you know, you just got that, that slows things down, right? That slows price down.
Speaker 1Yeah. And when you buy those products, you get none of the additional benefits of Bitcoin, right? Being able to control your own asset and send it anywhere around the world at any time. So now let's bring it over to these markets, which you have lots and lots of experience in. This week was a whipsaw. We went up the Dow 1600 points on Wednesday, and then down 1800 points on Thursday. NASDAQ was down roughly 6%. On Thursday, as well as Bitcoin pretty much mirrored it. What is going on here? Is this the end of the AI trade? Well, it's not
Speaker 2the end of the AI trade. From an investment standpoint, I think AIs, besides the money transformation happening and the tokenization of everything, I think AI is the most important. exciting area out there right now. But tokenization is right up there. I mean, the financial superstructure is completely changing. We are tokenizing. Eventually, that means 24-7. That means immediate settlement. All kinds of, you know, when things go on chain for real, because right now, the digital ledger for Wall Street has been DTCC. And to put it on chain means DTCC is out of a job. That's why a lot of the benefits of blockchain and Bitcoin, you know, they eliminate the need for powerhouses that are on Wall Street. DTCC is a powerhouse on Wall Street. So, they're not just going to say, oh, yeah, let's just go on chain. And I think that's part of the reason, you know, Trump came in and all this tokenization, this, we're going to do this. I saw the NYSE filing for tokenization, NASDAQ. And I'm like, wow, we're just going full throttle on this. What about the DTCC? You know, don't they care here? And then all of a sudden, everything starts slowing down. I don't think that's Trump's fault. I think it's the inertia of, you know, 100 years of financial superstructure that's in place. Bitcoin's disrupting that.
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Speaker 2And like you said, all these cool reasons that Bitcoin exists, most of the new buyers don't really get that. They basically buy Bitcoin because it's a tech play or an AI play. So, it's a very, very simple thing to do. uh definitely not um but it depends on what you mean because um it's ai i don't know what's more important than ai right now what's happening in ai is blowing my mind so um i mean you just had a six billion dollar hack although that wasn't really a ai related that was more i would say not oceans 11 theft um you know just really smart work by a bunch of smart thieves you know and so it's not to my knowledge what i know about it it wasn't really an ai thing but the ai hacking is happening to as it will continue to happen um the cool thing is bitcoin still hasn't been hacked you know that was a hack you know binance got hacked that's an exchange what's the whole point of bitcoin you know not having a trusted third party so if you want to hold your coins on an exchange that's you know that's up to you binance made everybody whole it looks like at this point um so i think that the sad reality is the use that the primary use case for bitcoin is never going to be appreciated until the inflation rate gets to a certain level in america to where people say enough and we're not quite there yet we're in a slow boil nobody likes that their burgers just went from you know eight bucks to 16 bucks to 20 bucks um nobody likes that but they're not willing to try to figure out a bitcoin wallet yet um because that's what it's going to take i mean that's why all of a sudden in iran in venezuela in these countries where inflation really gets out of control all of a sudden hey they figure out bitcoin they know what a stable coin is um and that's what really monetary adoption the monetary adoption of Bitcoin won't happen until the pain level of our spending problem shows up so convincingly in people's budgets that they say enough. And we're not quite there yet.
Speaker 1I think you make a great point. And listeners of this podcast have heard me say numerous times that, yeah, Bitcoin is anti-fragile money, right? It shines the brightest when things are the hardest, such as the great financial crisis which it was born out of covid when they printed 10 trillion dollars as you often say in a matter of 18 months and yeah since then bitcoin like we've uh we sort of won a lot with the etfs and the trump presidency and these treasury companies and people have sort of forgotten that there's there's much more to bitcoin than number go up and i think another group of people that probably just learned the importance of bitcoin are the people in uh in Paraguay, right? This last week, 60% of people in that nation lost their money as the number one bank collapsed overnight. So yes, it's those kinds of things that will wake people up to Bitcoin. Do you think that such a catastrophic event, such as a major bank failing with tens of thousands, millions of people losing their bank accounts could happen in a place like America?
Speaker 2Of course, but the reason I'm hesitating is just because we are the global reserve currency. So unfortunately, just like in 2008, when you had all those bank CEOs lined up and flogged in front of the public, more ceremonial than anything, they all got bailed out, though. so i think i think the u.s government cannot risk that so i do think they would they would um back the bank but um and they have they've shown that but at some point people will realize it's just you know it's just a ponzi you know it's really the cool thing about bitcoin is when all these shit coins came out and everybody had a better way of owning bitcoin or the next bitcoin this one's faster and this one does that and everyone's trying to judge which one because i mean i went through it you know i remember buying some of the the other ones because i'm like this is sweet, you know, Litecoin's even faster, you know, and Monero, that one I can do anonymously. And, you know, so there were all kinds of cool stuff coming out, you know, I felt. But if you just take a look at the dollar as a coin, as a shitcoin, and altcoin, sorry, I won't say shitcoin, as an altcoin, then it's, you just laugh at it. you'd laugh at it you know and they were laughing at i remember all these white papers were flying off the board with all the coins icos that were happening i remember tron coming out and i remember reading the white paper for tron and going wait what is this and because i remember reading satoshi's white paper and it just was like beautiful i mean it just makes so much sense peer-to-peer digital cash system you know and we need digital money we're in a digital era it just makes sense right but i can go direct direct to you that that concept was so cool i didn't have to go through a bank and get somebody's permission because really everything at a bank is a claim most of us do keep our the lion's share of our money at banks and it's just a claim on that money, because they can freeze it. They can lose it. There's lots of things that can happen to that. And things go as normal, you know, you'll get it. But they don't always do that. So can that happen in the US? Of course, I do think the US would bail it out, because the biggest loser there would be the government, because people would lose faith in the US dollar. And I think they can't allow that to happen. So I think the US dollar gets supported no matter what. But ultimately, how can you just keep inflating things, people are eventually not going to be able to keep up with buying things at the rate they're going up.
Speaker 1Yeah, the US government can't allow these major institutions to fail. And you as someone on Wall Street, I mean, you've seen these guys get away with basically murder, right? And do they feel impenetrable? Do they feel like they can do no wrong and no matter how big of a mess up they have that they'll walk away scot-free?
Speaker 2I think so. And I would, I would go across the board with that, you know, in, in the political landscape, why people can just say things that, um, they never follow through with, you know, why can they just, how do they get away with stuff like that? And I think as long as you're part of the system, what you say, you know, won't be held against you. But if for some reason, you know, you're on the outs with the people who are on the in, you know, all of a sudden they'll find problems with what you're saying. And you'll be at the other end of that. So for sure, there were banks that were let fail, Lehman Brothers. I know I was part of Smith, Barney, Shearson, Lehman back at that time. And so there are some that are let fry for whatever reason. It might be an insider squabble. Guy might have ticked somebody off. But in general, you play ball. Everybody supports everybody.
Speaker 1Yeah. It's a big club, and we ain't in it, right? That's right. But now I want to circle back to what you were saying before about the Binance hack, right? Since this summer, Bitcoin has really taken it on the chin, whether it's cold card, the entropy bug, liquid getting hacked, Binance getting hacked. I mean, these are hundreds of millions of dollars that we're talking about, right? And it's never been this bad in terms of Bitcoin and security. And as you said, Bitcoin itself has not been hacked, but all these different institutions and companies built on top of it have. What has been the institutional reaction to this news? Have they even heard of it? Do they care? And Bitcoin price has been able to withstand. So what's going on here?
Speaker 2Yeah, you know, a lot of people say, why is Bitcoin just stalled here? Because we've had so much hit the fan here. Like you said, from the cold storage side and then from the exchange side, from the liquid side, which you got Adam back, you know, one of the OG Bitcoiners, you'd think, you know, what he set up would be pretty, pretty solid. So it's actually pushing people, I think, more and more to like ETF holdings, because if they can't keep it in cold storage, they're going to have to keep it in the cold storage. And they can't keep it on an exchange and they can't put it in liquid and other OG Bitcoin or places that everyone thought was safe, like the cold card. And I think it does, it does undermine, it does undermine the price of Bitcoin. But I think you have such massive institutional adoption. And sadly, what I'm afraid is happening, is all the, a lot of the OG people are going, oh, no, Bitcoin's been compromised. Wall Street's involved now. So some of them drop out. Then you got the ones who've been in a long time. They're like, you know, I think I'll just take my profits. You know, this doesn't look like it's the same Bitcoin anymore. And then you have all these institutions who are coming in going, this is great. You know, you know, one, one to three percent. Yep. We're going to allocate to it. They don't really, I don't think they pay attention to a six billion dollar hack on Binance because I think they see that as a Binance thing. Now, Bitcoin gets hacked. I think then you've got a big problem. But that hasn't happened. And, you know, I think the cryptography is there and there's a reason there's been a trillion dollar bounty on Bitcoin and nobody's ever cracked it. And I understand the cryptography. It's actually empowering. It's exciting and gets you really because I in my opinion, AI will crack your Wells Fargo account long before it'll crack Bitcoin. So when people say, aren't you worried about quantum computers and an AI? Well, yeah, but where are you going to put your stuff? Because Bitcoin is still the best cryptography I know of. And so, you know, I think traditional bank accounts are going to get sucked dry before your Bitcoin would.
Speaker 1And you consider yourself a math guy. And we've had all these AI breakthroughs just in the last month or two when it comes to math, like these decade long problems that had gone unsolved are finally being cracked. And yet none of the findings have to do with cryptography. Do you think that they are purposely hiding the cryptography findings so as not to unleash pandemonium?
Speaker 2That's interesting. You know, I, in this case, who would they be? Open AI, anthropic in conjunction
Speaker 1with the government because they're definitely in cahoots at this point.
Speaker 2But here's the thing. If they if they were able to crack the cryptography of Bitcoin, you'd start to see the wallets getting drained. So I think the evidence would be so undeniable they couldn't hide it, you know, if if if that was happening. So, no, I would I would say no, I don't think they're hiding that aspect. But it does blow me away. What I could do, what I can do today versus what I could do six months ago and chat GBT. It blows me away.
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Speaker 2So, I have no doubt, you know, we're on an exponential hockey stick here in terms of AI, but that's also, you have to remember, that's also going to benefit Bitcoin as well. You know, it's the people that are behind the cryptography can make it better, right? They can, as AI develops here, we can increase the cryptography. when we need to. And I do firmly believe that, I mean, the cipher pumps were leading the charge, you know, 20 years ago. And so, you know, there's still the coders, you know, in the end, in code we trust, and coders, you know, rules without rulers, coders, you know, coders write code. And I do, I love that aspect of Bitcoin, that it's something everybody can see. It's open source. You know what the rules are. You know what everybody, what governs everybody. There's not a monetary policy that's changing with some political party. And all of a sudden, Bitcoin changes. So, super exciting with AI. And definitely, I'm not going to say, you know, AI could never this or could never that, because what it's doing now, I didn't think I'd be seeing, especially not this
Speaker 1year. Yeah. And in light of these security hacks, and the advancement in AI, now people have different options of how to store their Bitcoin. You've got the ETFs, you've got treasury companies, of course, you have Bitcoin in cold storage. Now, not in terms of financial advice, but how do you think in terms of security, and investment, and allocation in these different buckets when it comes to Bitcoin?
Speaker 2Yeah, I think until things get, until the chaos meter goes up a little, I think you're fine being on an ETF in an exchange, a regulated account. I think to go cold storage, you can't just, I mean, I think cold card proved that you can't just, you can't just trust somebody else to generate your keys. I mean, I never, that would have never been something that would have affected me, because I wouldn't sit there and then pull my money out of a bank, and then trust some wallet to generate my key for me. I mean, I would have said, wait, wait a second, what? Why do I want to use that guy's key? I mean, I don't know where this came from, you know, and I would have got my dice out, my Las Vegas certified grade dice, and just started running them all out myself. But in the meantime, so unfortunately, the sophistication level has just proved to us that we're not going to get a lot of money, and we're not going to be able to get a lot of money in the future. And so, you know, I'm not going to be able to get a lot of money in the future. I'm not going to be able to get a lot of money. It's just proved to us over the last 12 months that you're probably better off letting, I don't want to say BlackRock handle your keys, but certain ETF companies that you might like better than, you know, some of the others, maybe some of the smaller ETF companies. But I do think the institutions, I would rather have Coinbase holding my coins at the moment in custody than You know, I wanted to give my daughters some Bitcoin and I was going to put them in cold storage in a wallet and give it to each of them for their birthdays. You know, I wanted to give my daughters some Bitcoin and I was going to put them in cold storage in a wallet and give it to each of them for their birthdays. And I realized that's not very safe because even though it's cool, you know, pretty easy to lose, you know, and you've seen it over the years and people losing it on their laptops and such. So I think obviously cold storage is one of the primary benefits, having a bare asset, having something that's yours, you know, a digital scarcity and it's mine and you can't freeze it. I love it. And you got to go there. But for the 95% of everyone, I don't know that they have the technical know-how to do that. I would, I just say. It's like, you know, I don't know if it's a technical
Speaker 1problem, but more a responsibility problem. People don't want to take that much radical responsibility for their money. They want somebody else to blame. They want FDIC insurance. They want to be backed up in some way. And when you have it in cold storage, it's up to you, man. As you said, you got to, you got to roll your own dice. You got to generate your own entropy. And let them trust the math, not the company or the hardware provider. So that brings me to a question. We've seen Bitcoin ownership in cold storage stay relatively high. It's gone down, of course, as institutions have come in, but there's still around 50% of Bitcoin in the world in cold storage, in ownership by individuals. Do you think that there is a problem if that number keeps shrinking? And at what level do you get worried that too much is owned by institutions and not enough by individuals? I think there's a lot to worry about, but I think there's a lot to worry about, but I think there's a lot to worry about.
Speaker 2I mean, it's the musical chairs thing. There's only so many chairs. So when the music does stop, don't you want to know you have your chair? So I think the level of comfort will continue to take that down, especially with the last couple of hacks we've had the last 12 months. I think more and more people will just trust the ETF companies to hold it for now. But I do think that can switch. pretty quick, you know, as people, I mean, you've seen small political laws change, and all of a sudden, certain stores are sold out of certain things. Because everybody's like, you know, oh, my God, you know, we got to go get those now. And I think Bitcoin will be the same. You know, I think people will realize I got to figure out this whole cold storage thing. But we're just not at that pain threshold yet. So I do think you'll see that percentage continue to shrink. Is it a problem? Yeah, in that it's one of the primary benefits of Bitcoin. But I do think most people aren't buying Bitcoin for that reason. So, um, but maybe, you know, just having the potential there for them to go off grid with it if they needed to. So, but maybe, you know, just having the potential there for them to go off grid with it if they needed to. I think, obviously, hopefully, that's appealing to people, because, because it is what makes Bitcoin, Bitcoin, freedom money, you know, it is freedom money. It's the people's money, in my opinion, and it's, at a minimum, it's great, a great competition to government money. And they've had a monopoly on money in the past. And now they have a competitor on the block. So they have to be a little more accountable.
Speaker 1And you yourself, you issue an ETF, that is a mixture of Bitcoin and S&P 500. What are the benefits of it? Who is it for? And how has its performance been over the last couple years?
Speaker 2Yeah, we do a 7525. Essentially, as a trader, I realized over 20 years into my career that the S&P 500 is very difficult to beat. After trying to beat it for clients, you know, for 20 years. And I had runs of up to seven years where I did. But in the end, that, that S&P, it's still one of the best kept secrets on Wall Street. So we don't, and because I was a trader, too. I know how much fear and greed come in between you and a positive bank account, investment account. And crypto is just that much more volatile. So at about most clients can handle about down 30, down 35%. And then at about down 35%, they'll start picking up the phone and calling you. And down 38, 39, they're burning up your phones, down 40, down 45, they're selling. Down 50, they're very disgruntled, they can't sleep. So to get through, you know, every four years, Bitcoin seems to go down, you know, 50, 60, 70%. To get through those, yeah, I do believe in the long-term performance of this asset class. So what we did is we back-modeled the percentages and said, so how can we get those big down years to a manageable down year for most investors? And then, but yet meaningful enough to where if it does what we think it's going to do and goes up past a million dollars. They're going to see it in their account. You know, it's going to make a meaningful difference. And the 75-25 was that initial blend. We are rolling out a few more cool products here in the next 90 days. So stay tuned. But they're all Bitcoin and S&P related. And it's to try to bridge TradFi to DeFi. And try to help. I mean, really, it's the, you know, we're original Bogle heads. We love, you know, love what Jack did with Vanguard initially. And, you know, he was a champion of the individual investor. And that was fun. Keep the fees low, you know, just buy the index. You don't need Armani suits and stock jockeys telling you, you know, to buy and sell every day. And I think that is the right method for, you know, 95% of the public. So the S&P 92% of the time over the last 20 years beat its large cap managers, its peer group, but 8% it didn't. So, I mean, if you think you're in that 8%, you think you can beat the S&P fine. But I think, I think most people would be pretty satisfied being in the top 92%. And then we, so we take what we think is the champion. Of TradFi and, and combine it with what we think is a champion of DeFi, which is Bitcoin. And we think they make a pretty good pair. So we're looking forward to, you know, kind of in, in, in terms of performance and use case, the, the proof of concept really bore true the last three years. We got Triple B into the market in December of 24. So. So we got a full calendar year in 24, a full calendar year last year. And then obviously we're, we're a month or two away from a full calendar year this year. And what's important about that is the first year, which is 2024, Bitcoin ran up 121%. And we were up 39% that year. So if you're in the S&P, you're up 25%. So you got an extra 14%. We would have even been higher, but at that time, we were up 15%. So we were up 15%. So we would have even been higher, but at that time, we were using futures because spot hadn't been approved yet when we initially launched that product. Now we've converted everything over to spot. So there's less tracking error. But then the next year, Bitcoin was down 6 to 7%. And we were up 10%. And then over the last crypto winter we've had this year. And then. Especially since October, highs down 55%, down 45% in a one-year basis on Bitcoin through the end of June 30th, trailing 12 months. And we sat at around plus 3% to plus 5%. The most I remember seeing us down was down 3%. And that keeps, I mean, people can sleep, you know, in that. Nobody's calling. I've been blowing up their broker's phone because they just blew them up. But if you're down 45%, that's different. You know, we think you lose a lot of the ups. So people say, hey, Bitcoin's, you know, top producer. Yeah, but it's those washout years. It takes a long time for people to get back in. And those washout years, there's more of those entry year that end up correcting before the year's over. So it doesn't look so bad. But in the meantime, people have sold out at lows and bought back in at highs. So they're not receiving the full return of that asset class. So. Our strategy is simply to make the the the the growth of Bitcoin easier to hold long term and the volatility of it. And if there you know, we tell financial advisors if there is a black swan event and that crypto holding goes to zero, you know, you still have potentially 75 percent, one of the most popular indexes on Wall Street. And that's you know, that's not a lawsuit. So it it's it's a way that we can help that third wave, the financial advisors who haven't come into the space yet.
Speaker 1And are you seeing people or financial advisors who already have some interest in Bitcoin advisors to their clients? Or is this completely fresh people to the concept of Bitcoin getting into BBB?
Speaker 2I think advisors still don't know what Bitcoin is. So. They're hesitant, especially in a crypto winter, to advise their clients to take positions in it. I think there's a few, maybe 5 percent of brokers who are very forward thinking. They realize this is a buying opportunity and this is when they they they make the big bucks because it's going to be super easy to buy Bitcoin 12 months from now. If it's in an uptrend, you know, great, but you didn't help your client out because it's up 50 percent from here, right? So advisors are supposed to step in here in these these periods. So but I think because there's so much. Ignorance around Bitcoin. That it's going to you know, it's it's going to take a crypto bull market to to fomo them in. And I will say it took me years to actually. I pulled Bitcoin up when it was a buck, had it on one of my trading screens and I watched it go to 100 and back down 300 back down 1000 back down and I had clients asking me about it and I said, well, you know, if a trader can if a coder can code it, why can't another coder counterfeit it? And that kept me out. But when it hit 7000, I was I said, OK, I need to I need to take 100 hours and research this and I was only four or five hours in my research when I saw the cryptography. And I just went, oh, my God, I could have bought this so long ago because I just needed to be reassured on the cryptography of it. But I thought I had to be a rocket scientist to understand the cryptography. And you really don't. Once you once you see it in plain English, it's not that difficult to understand.
Speaker 1Yeah. No matter how puritanical you are in Bitcoin, everybody agrees that number go up is the best marketing. It's what drives all the fresh faces into the door and is a self-fulfilling prophecy keeps it going up and up and up. So let's talk about price. I mean, we keep saying crypto winter, crypto winter. This is definitely a Bitcoin bear market. We're down 50 percent or so through the course of this year. Now back up. How how would you define this bear market compared to others and is it easier to sell now that's not going down 70 to 80 percent?
Speaker 2Yeah, I think if you look at the crypto winter from 2022, the the candlestick chart, if you overlay it, is very, very good. It's very, very similar. So I will say I think I don't know what people are looking at, but when I overlay them, they're almost identical. So I think we're still technically trending this this this four year cycle. I know a lot of people thought we broke out of it, but it doesn't look that way to me. And so we could still have one more leg down here, but it does feel like. We're right there at that point, we're going to get we're going to get the I think once we get back above one hundred thousand. You know, I don't see us dropping back into the. The the under one hundred thousand in a long time, not so we can't, but just if we wouldn't stay there is what I'm trying to say. My bounce Bitcoin can do anything in a day. We could we could flash crash down to forty five thousand tomorrow and be back up to eighty five thousand. The next day. So the people that put in these stop losses or they're on margin, they really need to be careful because, you know, that kind of stuff can happen and it'll just shake them out. They'll get your they'll get your coins and they'll be right back up to where it was and you won't know what happened.
Speaker 1Remember one hundred thousand dollar Bitcoin? We haven't seen it all of twenty twenty six. That was so cool when Bitcoin was over one hundred thousand dollars. But let's look ahead. I mean, what do you think for twenty seven, twenty eight? Are we going to have an epic bull? Run? How high could it go? I definitely think we got a two year bull here.
Speaker 2We just went through a two year bear. So I like I like big points prospects here. I can't deny a six billion dollar hack, a cold card hack, a liquid hack. I mean, these are definitely some major blows, so I can understand why we dip one more. Time here. But because so much institutional capital has come in and that stuff just doesn't move, Rob, it once they come in, they're still layering in. They're not going, oh, no, there is a finance hack. What do we do now? I mean, it takes them so long to make a decision to go into an asset class. It takes them that long to get out of an asset class. I think we still politically have two years of smooth sailing here. The innovation exemption from the SEC in that was pretty amazing. To allow automated money market market makers and these decentralized exchanges to transact tokenized securities and ETFs on their platforms without a exchange license. Wow. You know, basically gave them five years to say, look, let's see what you guys do. If you make a mess of it, we'll come back in. I mean, I think. I think that's unreal. And I think that rolled out right after the Clarity Act failed. So I think what happened is from a there's difference between regulatory rules based executive orders based clarity and legislative clarity. And we really haven't got the legislative clarity yet. They can't agree on it. But from a regulatory. Standpoint, it's been one announcement after the other. It's just been rock solid. So this is this boat's going full steam forward. And there's only 21 million coins in the end. So there I agree with. The people who say that there's there's. There's no way Bitcoin can't be successful because as a scarce digital asset, and governments so inept, the more inept governments are, the more powerful Bitcoin becomes. So it's a win win, I think, because even, you know, even if you love governments, they'll be more efficient with Bitcoin, right? They're going to be more responsive. They're going to be more competitive with with a competitor like Bitcoin. So, yeah, I think it's. It's a win win for everybody in the end, but it definitely disrupts the status quo.
Speaker 1All right. So in closing here, let's get a little philosophical. Let's zoom out. What have I learned about you? You believe in AI. It surprised you and how fast it's growing. You believe in Bitcoin. You are a sound money student and you think that Bitcoin fulfills this. But you also think that governments are irresponsible and that we're sort of nearing this point where inflation gets out of control. So that's a pretty and a scary. Picture at the same time. What is the world look like in ten years from now? 2036 Bitcoin, AI, government debt and how is the average person deal with it all?
Speaker 2Yeah, that's a that's a really good question. I mean, I do. I. I mean, you're talking world views. I do think. As within, so without. So what we're looking at is a reflection of what's inside of us, and we can whatever we focus our attention on. Everything's energy and vibration. So I think we have to left swipe a lot of this crap out there and not focus on it, not get wrapped up into it, not. Give it attention, not give it energy. And we focus on the things that we love. We focus on the things that make us happy, I think. Self love. Is is pretty important. I think in the end, life is a dance with yourself. So if you can't get to know yourself, you're in trouble and good luck trying to have a relationship to somebody else if you haven't gone deep with yourself. And I think so, self discovery is key, I think, being. you're authentic. self is key to happiness. And so the cool thing about Bitcoin for me is it's an even playing field. So because in the end, we do need to keep some sort of score when it comes to money. And wouldn't it be nice if that score card was the same on everybody's desk, you know, and it wasn't just different for everybody and we had to guess what was going on. So I think we can create this grand new utopian society. I do believe, you know, inherently people are good. I know there's a lot of pushback there, but I grew up in a background that taught that you couldn't trust your heart. But I no longer believe that. So I think, you know, I lived on Hawaii a lot of my life. And I can tell you on those beaches, you see people from every country. They're all having fun. They're laughing, they're jumping in the water. Nobody's sitting there going, Hey, I got to go punch that guy over there. And I got to go do this to that guy over there. Nobody's doing that, you know, but so I think a lot of this conflict is, is the people in control try to divide us and get us angry at each other. And they say, that's a bad guy over there, go kill him. And but you walk back from that. And I think people don't just grow up wanting to kill you, they just don't want to kill you. And I think people don't just grow up wanting to kill you. I think people don't just grow up wanting to kill you. And I think people don't just grow up wanting to kill people. I do think love is the common denominator. So for me, I that's where my baseline starts. And then I'm more of a Tesla guy. So I'm more of a math guy, more of a frequency guy and vibration guy. But the math has to work. And the thing about Bitcoin is the math does work. So philosophically, I'm more of a math guy. So
Speaker 1really back into the bottom line, the last question
Speaker 2you asked me, what does the world look like in 10 years with AI, Bitcoin and the government debt issue? Wow, I think you have to give some sort of some sort of credence to the whole simulation theory. Because when you see what AI is doing right now, you don't want to be a math guy. Elon Musk first brought up the simulation theory. And he's like, there's a just a $100 billion, billion chance, one in a billion chance that we're, we're in base, base layer reality. I'm like, what's basically a reality. And then, you know, actually, after you start looking at it, it makes a lot of sense, especially when you're seeing what AI is doing now. And I certainly don't think the history that we've been taught is anywhere close to the whole picture. So I do think there's lots of civilizations before us that have been very advanced. And so we've been through these cycles before is what I'm saying. I don't think this is the first time AI has popped up. So we obviously got through them. In the past, the trajectory of AI is so unreal right now. I it's so hard for me to answer a 10 year question on AI, because it can do everything. I mean, when I was growing up, I remember getting a calculator being a math guy and going, Oh, my God, you know, I, I have the cheat code for all math. Well, AI is like the cheat code for life, you have access to every bit of information at your fingertips anytime you want it. And it's just, it's incredible. I hope we use it for good. I, I, I like what the cypherpunks set up. I like that blueprint. I so 10 years, if you had to have me pull up my crystal ball, the debt obviously is going to get worse and worse because they can't cut spending Bitcoin become more and more valuable because it's a scarce digital asset that can't go above 21 million coins. And so I think we get closer and closer to this point where people take their self sovereignty seriously. And they don't give it up so freely to governments. And it becomes more people in the end become more powerful. And, and I think we all start to embrace each other more, you know, we're not as divided, you know, not as divided. And we don't fall for all of this, this stuff being shoved down our throats that everybody's trying to kill you and you need big government to help you. Just my, my feelings.
Speaker 1Beautiful. I think that's a great place to wrap it up. Made of my own heart. Yes, everything is vibration. Everything is frequency. And what you put your attention to is what shows up more in your life. Well, Michael, thank you so much for your time. Where should people go if they want to find out more?
Speaker 2Yeah, just cyber hornets.com. And we've got some, some pretty cool stuff coming out to on the Bitcoin front, some websites that will sneak out as well. We're close, but I can't give the the web addresses yet on that. But we're going to continue to push out ETFs that combine the S&P and Bitcoin. Just to kind of help people smooth the ride a little bit.
Speaker 1There you go. All right. Thanks a lot. We'll have you back on in the future.
Speaker 2See you, Rob.
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