Transcript+
It all comes down to computers communicating. The information superhighway can be a confusing mix of on ramps and off ramps. Bitcoin is worthless artificial gold. Is it still rat poison? Probably rat poison squared. We need to get into the world of OK, this is actually foundational technology. What the Internet of Money does is it creates a single network which can do a microtransaction to a giga transaction. The Internet is going to be one of the major forces for reducing the role of gun. The one thing that's missing that will soon be developed is a reliable E cash. Hey guys, hope you're enjoying the podcast. It was a great show. Went very deep into some of the nuance when it comes to custody, best in class products, how the ETF landscape and Bitcoin treasury company landscape will evolve. For any of you know, listeners that really appreciated some of the undertone in in our logic in our directional thesis on how the market will play out, I'd encourage you to check out early riders.com and also a specific piece of research that was recently produced reckoning, reckoning with the new cost of capital, really discerning and explaining, you know, the benchmark rate or risk free rate is no longer there. But then ultimately, how do you actually measure against Bitcoin and then really ultimately build businesses and services that will accrete more Bitcoin? Bitcoin is a new herb rate gets thrown out very often. But the reality is there's a lot of fundamental understanding of how to build, how to return capital that will be TBD on what it looks like in the market. We have a pretty fundamental thesis on how we build businesses, how we allocate to businesses, leveraging that. So we return capital in the form of Bitcoin denominated units. So I'd encourage you to check that out and also just schedule time with us. Or if you want to learn more, we have a research that comes out weekly. We're going to be increasing that cadence as well as a weekly newsletter that really covers a lot of the business news and things that are happening in the space. So if you want to talk to us or just get engaged with what we're building earlywriters.com or you can shoot us a note as well at contact@earlywriters.com. Now I hope you enjoy the rest of the podcast. And we're live. Welcome back to another episode of Final SETTLEMENT. Today is Monday, August 11th, 10:10 AM. I'm joined by my Co host as always, Liam Nelson, Michael Tanguma. How are we doing? Boys doing fantastic. A little bit of a pump this morning. Vibes are high. Brian's got a nice background, couldn't be better. Some nice flowers in my background. I'm down at the beach, Jersey Shore. Can't complain. A little pump last night I thought we were going to make new all time highs live on the show today we've we've retraced a little bit down to 120. We tank down to 120 boys. Yeah, the Sunday night pumps are always fun. You just kind of have a weekend, it's good. And then you know, the the week's about to start and you just kind of looking at your phone and you see it just RIP. So lots of things on the docket for today. Big show, great show for you. I think we're going to start with some news from last week around Harvard's endowment. This is the largest endowment in the world. They manage around 53 billion in assets and they disclosed late last week that they bought some IBIT BlackRock Bitcoin ETF, around $117 million worth of IBIT as a percentage of their portfolio. That is 0.2%, which sounds like a familiar number because it is bitcoins market cap relative to the global asset landscape. So Bitcoin is a little over $2 trillion asset today. There's around 900 trillion to 1 quadrillion of, of assets in the world. And so, you know, I, I sort of viewed this as obviously a, a super constructive development just in the sense that it is the most reputable, most credible, the largest university endowment that is finally getting exposure to, to Bitcoin. But they're basically a neutral market weight if you consider again, sort of Bitcoins positioning in the global asset landscape. So they're off 0. They've now allocated, they're no longer short Bitcoin in a sense. And so it'll be very interesting to see, I guess 1, you know, who follows this because I think there was already another report or another disclosure last week from Brown that they also allocate, I think it was a little bit smaller allocation size. But it'll be interesting to see as we continue to monitor the 13 F filings from, from the ETF's who follows suit here. Because, you know, typically the largest, most credible endowment gets sort of, you know, other people to follow in their footsteps when they make new allocations, new investment decisions. And so I guess the other, the other thing to monitor will be, you know, if Bitcoin appreciates pretty rapidly here over the next 12 months, will they rebalance or will they just sort of let that allocation grow beyond 0.2%? That's the other thing that I'll be curious to, to monitor. But gentlemen, what are your, what are your thoughts on this this news? Yeah. Well, one, it's important to note that a lot of Harvard's assets are not for us to see publicly. So we can, I think the estimates are that they hold something like 35% in both hedge funds and private equity. So I would imagine that through their other fund managers that they have exposure to that they're, they're actually holding Bitcoin through or Bitcoin type exposure through the other fund managers that they have. I think it would be, you know, pretty unwise to have no exposure to the industry overall. And so I would imagine that there's something a little bit larger than 0.2%. But yeah, this, this is notable. It's more notable to me, too, that they also hold $100 million worth of gold. And in this Harvard management company, which is the business line that allocated to Bitcoin, they, you know, didn't allocate to any other crypto assets. They allocated to Bitcoin and gold. Bitcoin being the larger position than gold, but a similar thesis, you know, they, they love diversification. And I would imagine that those are the two assets that they see as very similar to each other. And it's very notable that they took a larger position in Bitcoin than gold. And I would agree with that because I think most of us on this call would agree it's a similar thesis, but Bitcoin is just a better improved goal. So those are kind of my initial thoughts, Mike. I thought the gold, the gold aspects, super interesting. I think it ties into a lot of the themes we've talked about and also other, you know, folks like Luke Roman specifically, I think directional sound money trades are are going to start to pick up steam. I think what's interesting, I've been thinking about the the treasury side and a lot of the narratives happening there around sophisticated investors are looking for buy and holds for a very long time. Everybody knows, you know, compounding gains as well as you make your money sitting on your hands, not trading. And I think that, you know, there's no shortage of reasons where these assets will be long term bets and everything else almost ends up as a speculative asset, whether it's crypto assets or equities and specifically equities with proxy exposure crypto assets. And I think this is very indicative of that. Like these firms aren't buying it isn't they're not buying MSTRI mean I don't know if they have other positions there, but like an endowment and pension are thinking very long term. And so I think that's just a Canary in the coal mine of like what is sound and what is not sound. And this kind of ties in. A question for Brian. I'm curious from your time at Brown Brothers, you know, due and diligence on strategies like this and working with endowments and pensions, curiously, what this kind of news of of Harvard stepping in to sizable positions in gold and Bitcoin. Like what would the chatter be like or what kind of directions would you guys start looking at just to understand fully what's happening? Because I would imagine like it's easier in retrospect are sitting in this seat, you'd be like, oh, we would have already been on to it, but probably wouldn't have at this time, right? Brown Brothers probably still looking at like the space, wondering what's happening, and maybe at best is looking at a gold trade, but definitely probably not Bitcoin. Yeah, no, it's exactly right. I I think they're, they're certainly going to be knock on effects of of a move like this. You know, just speaking from a former Brown Brothers perspective, like, you know, they, they had very strong views around, you know, cash flowing assets, right? And so they they never had really any exposure to gold in their own portfolios. But that being said, there was always a sort of reverence for what top allocators were doing. So and and like I said before, like Harvard's endowment is sort of the preeminent player in terms of sophisticated allocation. And so this will have shock waves across the the tratify space in general. And, you know, I think it is just going back to the point around, you know, this, this tying together of the Bitcoin and gold narrative, this, this sound money narrative. I think it's very important because I think historically over the past decade or so, you know, Bitcoin has naturally been lumped in with crypto and broader sort of emerging technologies, right? And so it's it's natural in some sense that that occurred in in, in sort of the similarities in terms of the, you know, blocked in blocked in technologies and people getting excited about that and just slumping Bitcoin in with all these other assets. When in reality, like the investment thesis for Bitcoin is, is very different than broader crypto. It is a sound money pieces. It's a hard money thesis that should naturally be looped in with gold. Like that is the sort of actual logical thing to to group it with from sort of a asset allocation bucketing perspective. And so to me, this is just a super positive sign that you know, enough people at Harvard recognize that and they're not looking to get Etherium Cardano Solana exposure. This is a sound money trade. They're expressing a view on hard money. They're expressing a view on the debasement of currencies effectively. And so I think that that will be that will resonate with broader stratified circles that have ignored that type of thesis for a long time. Generally speaking, again, this this focus on cash flowing assets, yield bearing assets like that has been sort of the the commonplace thinking among these circles. And I think, you know, Harvard taking us a step in this other direction, I think will be very powerful in terms of opening people's eyes to this concept. And and, you know, also just questioning like, was I wrong about Bitcoin? Because again, this sort of tying together of the sound of money pieces, Bitcoin and gold is probably a a sort of fresh perspective for most people that have heard about Bitcoin from a, you know, have been around the hoop on on sort of a cursory level and didn't really understand what was going on. Like, this is a strong signal to them that like, no, this is just how you express a view on the plight of Fiat, the plight of bonds, effectively. Yeah, that's very well said and you can go ahead. I was just going to I was going to say I think it's low key and super underappreciated how sophisticated actually the allocation earning uses, because ultimately what we've seen in this market is people are very it's not even ideological or tribal. It's just myopic, I guess is the best words like people like latch on to their direction and they stick with it. So it's like crypto speculative only there, it's only Bitcoin, it's only gold. And the real value in life is in nuance. And then really when you find the desperate ideas and you ultimately they collide together. And this notion of an organization saying and taking material bets in both is, is a is very sophisticated version of that group coming to a conclusion of like what we've not only been talking about, but just at the end of the day, it's pretty straightforward, even though it's insanely taboo and heretical to talk about is like golden Bitcoin or money and everything else is credit. And the rest of the world is going to wake up to that over the next 10 to 20 years and place your bets where you want because everything else has counterparty risk. We're going to talk later about, you know, some Silicon Valley companies kind of blowing up or, you know, having to get marked down. And like, people just hear about markdowns all the time, but they don't understand that that is like endowment sovereigns and other institutional allocators literally just marking down hundreds of millions, if not billions of dollars in wasted capital. And they're going to be insolvent unless they're holding hard assets. And even if there are holding hard assets, they may still be too under allocated to make themselves solvent. So I think that's just where we're going to go and and tradify banking fintechs all know 6040 and what's the plumbing for that? And ultimately we have this visibility and foresight that gold and Bitcoin will be integrated into traditional individuals finances. Because you can actually eat those things. You know, jokingly, you can't eat them, but you can't actually trade them on the street for a cow. You can trade them on the street for a house. You go take when shit hits the fan, your gold or your, I'm sorry, you're like Amazon stock or your open door stock or whatever it is and try to go like do something with it or your bonds that are negative yielding that you know, can be easily seized and try to purchase something with. And the market's just going to naturally wake up. And the sad part is this is how like for thousands of years, people specifically hundreds of years have like managed their own personal wealth and we just kind of have moved away from that where this is an insane topic to to bring up. Well, completely agreed. And one other thing, it's important to take a step back and understand how they made this allocation amid the fact that they are losing federal funding, they which makes up a significant amount of their total overall operating costs. And that likely has an impact on, you know, their allocation strategies, likely trying to be more conservative amid the fact that they're just losing additional money in federal grants. And, you know, there's a lot of uncertainty about their donor base and if they're going to continue to get as much funding as they did in the past. So getting that through the investment committee with the fact that there is additional just scrutiny and stringent and you know, everybody likely wants to take a little bit of risk off the table is 1 aspect that it should not be understated because there it's, it's very conservative time for all these endowments and think that they likely have just seen the performance and impact of all of the, they have a massive position in the hedge funds. And I'm sure that, you know, I mean, the, the best strategy on Wall Street is copying the winners. And that's just what they all do all the time. And so a lot of their hedge funds must have had big positions in Bitcoin and other assets that they're just trying to copy. And because all of their other allocators that they're that they're working with are just showing them the thesis of this is just the new world that we live in. You don't want to be as allocated to bonds as you were in the past. And hard assets are the new really way to go. So I think, you know, getting Bitcoin is going to be viewed as a little bit less risky. And pensions at this time are probably the ones who I would be are just the ones who would be laggards of all the different asset classes to allocate to Bitcoin at the time. Yeah. And the other couple things I would say is like I, I view all of this as sort of, you know, an instantiation or a reflection of what our, our friend Zoltan Pozar said probably 3 or 4 years ago at this point. He wrote a piece for Swiss when he was still an economic strategist there just talking about this concept of moving towards a more multi polar world and that you know, forms of outside money, namely gold and Bitcoin would greatly benefit from sort of the geopolitical transformation that was occurring. And so I think that this is now coming to a head and, you know, the Harvard's of the world getting on board with that notion and that idea. It really, you know, we've talked for a long time about the career risk aspect of Bitcoin. I think the first step in sort of chipping away at that was just like the ETFs being approved and being available, so setting up that plumbing. But now with a move like this from Harvard, like their career risk is, is really gone. I I think gone in the sense that if Harvard's doing it, you're allowed to do it. Yeah, go ahead, Mike. This also goes down the track though around you're right, except for the career risk. We'll now end up with how do you do it? And then if you get rubbed in your counterparty and it's it ties into why it's a long term nonsensical take to believe that all these sophisticated institutions can't get exposure to Bitcoin or won't be allowed to get exposure to Bitcoin. Like if they want it, they'll figure it out and like IE Harvard, and then once Harvard wakes up and you know, somebody gets rugged, they'll have a conversation because it's the same track for everyone. That 100 million, whatever the percentages, take that and put that as your own personal portfolio. Back in 17 or when anybody listening got into space, you naturally evolved not only the position via buying more Bitcoin or the appreciation, but then ultimately how you started to think about custody because it just became too material. Even if you didn't increase your exposure, the price just went up. And so that 100 million might be fine for them today. But if it's a billion, right, if it 10 XS or they increase and that's not increasing in a vacuum because Coinbase's custody is increasing by 10X, the insurance doesn't exist. All these things are going to naturally occur and they're going to go seek out better solutions. And the same that also doesn't happen in a vacuum that these other institutions will be looking at these treasury companies if they had exposure and if it increases and they'll wake up and be like, wait, why am I buying like The Dirty version of this? Like I want the synthetic spot like hard thing. So that's like again, the long term, just understanding there's like 10 different layers around why this like craze as it makes sense. But that's just a very simple first principle version that once somebody gets educated, it's like why do I want all this filth associated with a derivative of Bitcoin when I can just get it best in class either through Coinbase and ETF and then that natural evolution will be into multi institution. So anyway, it's just this is all plain out. It's just like it's basically how long you've been in this market, you get to see these things and then we just wait for the rest of the market to show up. Yeah, it's a, it's a really good point because just going back to what I was saying about inside money versus outside money, like owning Bitcoin through I bid is like quasi inside money. Like it's not, it's not the the real thing and it's not truly outside the system. And so I think you're right, Michael, that there is going to be like this is just the first stage of them really understanding what the asset is and and the best way to secure it for the long term. A related story that I wanted to jump to is we're going to tear off gold boys. And this is a significant, I think people are attributing the sort of price pump in in Bitcoin over the past week or so to this. I don't know if it's a directly correlated, but we're going to be tariff in gold. And I'm just looking for the tweet right now. But what are what are you guys thoughts on this move generally speaking? Well, did they reverse it or not? Because I don't, I I saw, I don't know, I saw both sides. So while you're looking for the tweet, I did see there's something about tariff and gold. And then our friend, he's come on at least once, Josh Fair. He has the Wyoming reserves, formerly Scottsdale Mint. I think it's one of the only tariff free zones set up in Wyoming. But I and so I saw him tweeting about it, but then I think I thought like shortly after they came, it came out that there's an exemption. So that's the 7th. What are we at today, the 11th? I think that something came out around an exemption, but I'm not confident in there. So maybe we should find out before. I don't know if Liam, do you have any thoughts? I mean, I think that just says that the US has their gold position they really want to have. It doesn't really make sense to me that they would be tariff in gold because if if they think it's the outside money and we're moving towards the system of increasingly wanting the outside money as they know that they can't sell long term bonds. It just doesn't really make any sense to me unless they already have the position that they want. Yeah, I think they're calling it misinformation. So this came out this morning. Oh, shit. That's August 8th. Yikes. Well, similarly, though, they basically say White House plans to clarify what it officially called misinformation about import tariffs for gold bars amid uncertainty, which saw some industry players pausing deliveries of bullying to the United States. OK. All right, so more to come there. We'll we'll try to suss out what's actually going on. But also related to that was the Paolo came forward with just reiterating that the other what they are a top 18 nation. If you know Tether was a nation top 18 nation in U.S. Treasury holdings, Top 40 nation in physical gold holdings and they have over 100,000 Bitcoin. So I think this is similar to what we were just talking about, like this is these are reserve assets, right? Like this is these are forms of sound money, at least in the, in the, in terms of gold and Bitcoin, I think they also own land, Michael, is that correct? But it's just indicative of like this is the trade, right? Like reserve assets, hard money, This is where things are going. And I think, you know, watching and, and sort of tracking what Tether does is always helpful sort of heuristic for, for what's going on in markets. Yeah, agreed. I think there's a there's a couple interesting things. One is we talked about this for a while, like you go, this goes back to like biblical times that they say you hold a third of your money in your business, 1/3 of your money in your property and then a third of your money like your land and then a third of your money. And and you know money, which is gold or Bitcoin. It's just time's a flat circle like you want the things that have value kind of moved away from them and and tethered and specifically, yeah, Tether have just understood this trade of scarcity. At the end of the day, it's actually pretty simple. It's also really simple when you talk about material wealth, right, Because if you need assets to park sizable wealth that are liquid enough, but also trades for the long term, you're not worried about like a quick pump and you know, like you're you're parking them in these things. The other thing that I don't fully agree with, but it, it goes back to the whole notion of it's kind of like the multi institution versus self custody. Do you want to be right or do you want to make money? Because being right would be like, well, let's all figure out how to sell custody and, and like just live in the perfect world. And it's just not realistic. Grandma's aren't doing it, people aren't doing it. Bitcoin's $1,000,000. We're all, you know, in a very bad spot. If everyone knows that in their house, they hold it, you know, they're self custody or have access. So that's kind of like the version of multi institution, you know, meeting the market, where they're at, where the market's going. And we haven't talked about this and it's kind of, I don't know how I feel about it exactly, but I just know this is what's happening is they're going to digitize gold and they're going to trade it and whip it around like it's Bitcoin and obviously it has counterparty risk, but obviously also financial services. About reputation, we talked about it a couple weeks ago or maybe last week about the free banking and free banking really is around reputation and being able to fulfill your obligations when somebody calls the claims on the underlying or the, you know, depository unit. And so point being is this is what you know, tethers doing, this is what others are doing in the space is they're going to take their access to gold. They're going to see where it sits. They're going to be able to, I mean, PAX did this and Paxos gold. We're we're looking at some other firms that are doing it. But it just makes complete sense. When you sit enough rooms, you see the boomers, you see the trillions of dollars in these GL DS, in these Sprott funds that it's an insane leap for a lot of people to just go from gold to digital gold that they can't touch or from dollars or equities or bonds. And I think everyone on this call and probably listening over a long enough time horizon, it probably ends up majority, you know, Bitcoin own, but there's going to be a very long and deep transition period. And I think that's one that's not really widely discussed on the Bitcoin side is they're going to digitize gold and they're going to end up trading against each other and and there's going to be a lot of movement. One last thing to say, Paulo also had a very interesting note around what they're seeing around commodities trading, because think about it, this is fascinating. I don't know if Brian, you've heard this is so we all know like stable coins really proliferated around the matching pair for BTC, right? There was, it was tethered originally, but the one in the US was, it was pretty whatever circle was called, I forgot what the name was. But point being is there actually hasn't been because it tightened the liquidity spread and the ability to trade in after hours. There hasn't actually been a stable coin for commodities traders in specifically net settling that. And so they're starting to play in that world, which is super fascinating to me because think about like there's a bunch of archaic infrastructure when it comes to the world's real capital. For better or worse, that's the world's sovereign underlying unit is gold. And then how do you trade around that? And there's miners all over the world. So I think there's a lot more to come in that whole space, and it's going to naturally intersect with Bitcoin. Agreed. Do you, do you see that happening with oil too? Both, you know, actually creating it for USDT or or whatever other stablecoin as well as a tokenized ish version of any other commodities out there. I don't. I don't know enough about, I mean, even the gold markets, but specifically the oil markets and how physical is needed versus the digital version, right? Because if you think about it, a lot of times, exactly express this a little bit in text and people say, well, gold has no value, but it's like, what value does Bitcoin have? Like it doesn't have tangible value in the same way gold doesn't necessarily have tangible value, but it represents something and it represents money in the same way that oil has underlying value, but then it's also traded a bunch. And so where does that like effectively, where are the inefficiencies? And then will they be used via that? The thing that I think ultimately the, the, the market will hit an equilibrium point around counterparty risk is where this all goes. You'll digitize a bunch of things and then people will trade them for better or worse, and then they're going to get rugged because there's going to be unscrupulous actors or people that don't understand risk and they're not going to have the underlying. And then the market will naturally find an equilibrium of who are the right players and the right players will have multiple things working for them. I think of this very much and something we'll talk about more of multi institution custody is there's three layers of like governance that is that that is embedded in there that people don't know or talk about. There's the technical governance, which is the notion of having embedded scripting language that you can have multiple institutions hold the private keys. And then there's legal governance because we still live in most jurisdictions and rule of law and that you have the courts to protect you until there's legal agreements representing the client. And then at the top level, which doesn't seem like it matters, but it actually supersedes almost everything when you think about it as gain theoretical risk or governance. Because if you have BNY Mellon, Coinbase, Fidelity holding keys, but today it's, it's our largest key holder is Bitco. And Bitco is a world class custodian, top 2, I believe custodian over $100 billion in assets under management, you know, about to IPO point being is why would they rug you for, for your 10 million or, you know, we have clients with over 1/4 billion dollars in assets. Like why would they rug that one client? Even though it's a sizable account, they would rug their whole business. And so very similar to this notion of if they're going to digitize things, they're going to have an efficient ways to trade them. You're going to want to know that if something happens, they don't make delivery, the ship that's delivering that oil gets hit by a cruise missile or whatever, a drone, that they're going to make you whole because their whole business relies on that level of trust and reputation. And so that's where I think this all ends up. Is there going to be a lot of people get hurt because they're going to play around, you know, players that come in that shouldn't have no business there. And there's going to be the tethers of the world that have war chests that when shit hits the fan, that's a cost of doing business. And they're going to make people whole, and that's going to drive more liquidity and more demand to their business. Yeah. No, that makes sense. Maybe transitioning slightly. Another big news item from late last week, I think actually Saturday, our boy Bo Heinz is out. He's resigned. He was working in the Trump admin in sort of a, a digital assets and an AI focused role. And he's decided to resign and he's going to be replaced by Patrick Witt. And so I think the reaction to this was mixed in the sense that, yeah, I think we we were texting about it when it when it sort of dropped, like is this bearish news? Was he not making enough progress in terms of everything the admin wants to do and crypto side, particularly around around Bitcoin and the strategic Bitcoin reserve? Or is this actually really bullish because he, you know, as a member of the government can't have sort of personal interest in visual assets? And does he want him to remove himself from that, go back to the private sector and be able to benefit from what's, what's about to come effectively from the administration? I don't know exactly where I, I land on it. I, I sort of lean towards the ladder that he probably sees the writing on the wall and wants to get out while he still can and benefit personally from it, as most things come back to personal incentives in this world. But what are your what are your guys thoughts on this? I don't have a take on the what Bo's doing. I don't I don't think we know like we can say we can, we can pontificate. But the thing that I do know, Ryan pulled up this clip from Bitcoin and Policy Institute. It's the only clip of Patrick Witt. I think that it definitely only clip around Bitcoin, talking about Bitcoin and the the high level because I listened to this morning before this is so it's the office he sits at is underneath the Department of Defense. It's the Office of Strategic Capital and some of the mandates are around looking at the hollowing out of the Defense Department and be more proactive around their managing physical, cyber, quantum, all the different things related to that from a geopolitical and national security perspective. They referenced that their budget went from 900 million to 5 billion in the past, I think 12 months, which is pretty substantial for them to allocate resources in the space. A lot of things looking at drone shipbuilding, just like where we're going, I think everyone probably listening to cursory understands China and manufacturing. We've kind of lost a lot of our ability to to build things here. And then looking at computer and energy, think about like domestic and abundant energy, which ties into mining. The thing he referenced is Trump and him and their mandate are referencing that economic security is national security. So they see this as something that's a priority. They referenced that Bitcoin. They see it as an engine of economic growth. They also talk about mining. And there's three components of like why they're looking at Bitcoin. It's the engine of economic growth, economic stability when you think about stable coins and everything else related to it. And then state craft, when you think about just the notion of Huawei and all these other third parties playing in that in the field of technological manufacturing and how backdoors and things like that could be a geopolitical risk. The other two things worth calling out that I thought were like the biggest and this kind of ties in because I've been in some rooms on the SBR fronts and well, it's kind of amazing that sovereigns, we like the taxes, waste a lot of money. We know that they did they bring in a lot of money, but they still don't have the natural resources. It's really kind of wild in the sense that all this money goes to waste because or at least waste in the things that would seem like the important stuff. When he brings up that they're having trouble parsing everything because there's so much information and they're they're they don't have specialists. So they're looking for trusted and objective resources on the policy. And that's where I think DPI comes in to really help them discern like what is happening. You think about multi institution, that's like the ultimate level, I think of like statecraft and economic stability. This notion that you probably don't want your sovereign reserve sitting in like servers in San Francisco or wherever Coinbase is. But then the other one that I think is the most important and it's kind of like very left by the wayside, is the GDP, like the economic growth of the United States. Texas is a great example of this, having like 27% of all the global hash rate, the amount of businesses, specifically Bitcoin businesses there. There is like very fundamental value being delivered. If you have people with large positions in Bitcoin living within your borders, because not only are they becoming wealthier, they're naturally having more optionality to build, you know, goods and services because that's what money does is allow for that kind of freedom to do that. And then you ultimately produce you you deliver that you have no, you can't help but like end up spending money and within the walls that you're currently facilitate. And so I think that's the big aspect of this is that all this capital be in the US is very positive for the world that we all know we're going into this natural deleveraging from, you know, stocks and bonds. Yeah, I'd agree. It's almost. It's definitely more more bullish if they can figure out how to get the Bitcoin in the hands of the private sector as much as possible, whether it's, you know, through private, encouraging private ventures around mining Bitcoin infrastructure or just, you know, encouraging people to buy Bitcoin either through the ETFs like they launched or just holding it themselves or, or through a custodian. You know, I, I think that kind of just going back to bow for a minute, it's, it's pretty impressive what the entire administration's done already and thinking that we would get a strategic Bitcoin reserve within our first year is maybe a little bit overly optimistic. There are a number of different priorities within every administration regime, etcetera. We the report probably this coming out right after the digital assets report where Trump mandated his team to find ways to acquire Bitcoin and budget neutral ways that didn't necessarily have anything in there that that we hadn't heard before probably was a little bit discouraging to some. And I think that, you know, you could probably do a lot better in the private sector if you are the one who got the Bitcoin, the US government buying Bitcoin over the finish line and then could do something in the private sector later. So I wouldn't be super optimistic that anything gets done. But and that's, you know, as as somebody who who would like to be we'll see what happens. But yeah, I think that the more interesting and important aspect is the United States government bringing as much capital in here to thrive and Dr. investment in Bitcoin and then use that Bitcoin to deliver helpful products and services. Yeah. And the other thing to note here is like, regardless of what the administration has put forth in terms of, you know, Bitcoin specific policy, whether they're going to accumulate or not, you know, we've kind of been talking about this for for a while now. But like the the writings on the wall in the sense that the chips are being placed on the table. So let me share this link of just Trump media confirming their $2 billion Bitcoin treasury and 300 million options strategy in their latest earnings report. So is there anything notable to to pull out of here or is it just sort of confirming what we already knew? I mean, the interesting thing to report is the $300 million crypto option strategy. You know, I think we all know that Bitcoins just the base layer of savings technology, and I think that everybody's gone a little bit too far in both ways of you should never have any investments outside of Bitcoin itself, as well as thinking that Bitcoin treasury companies are the thing that will save everybody. It's just the reality is that people should do their own research, understand where their Bitcoin actually is and have deep alignment with the leadership that's making that happen. And if the risks that are unknown unknowns or that you can't quantify don't outpace the potential returns, you're probably better off just holding Bitcoin yourself. And you know, we'll, we'll see additional options based strategy around Bitcoin and Bitcoin related securities in order to for people to try to get more Bitcoin. And it's not to say that none of them will ever work. It's just do your own research and think about the potential risks and if they outweigh the returns yourself, it's. All said Michael, Any thoughts there or I was going to move on. Yeah, I don't have anything. All right, I want to share a good charter or table from River and this is some, this has been a recurring theme on the show that we've talked about for many months. But the banks stepping in and and preparing products and services around Bitcoin and and broader digital assets. But this chart in particular is is taking the Bitcoin products by the top 25 banks in the United States. So 13 out of those top 25 are now in the process of building Bitcoin products for their customers. And so as we look at this list here, a little bit more focus on the trading side of things, at least initially, there's a few exploring custody products and services, but what do we make of this guys? Yeah, I thought this was fascinating. It really underpins how it's definitely greater than 0 and it's starting to look like closer to 50%. How we just might end up in this long, I don't know, like I kind of hesitate in saying, you know, long term bull market. But in this notion of I think that the confluence of two things would happen is 1 is the sovereign bid. Because we, I think we talked about it last week. Maybe it was on the last trade of ultimately if sovereign step in, they're the, you know, the longest term holders. Like why would they ever sell the asset? I mean, especially like on a, you know, top five or top 10 country list, not somebody even like Bhutan selling because they're like they naturally need to, but they're not like selling core positions. So you take that sovereign bid and then you take the fact that these banks have not turned things on yet. They're still working on their strategy. And so I've referenced both of them because there's a world where they do turn things on. Sovereign bid doesn't step in market delevers. And then we kind of go back into the similar situation post FTX because a lot of people you know, in the industry and you talk to people built strategies and then they all kind of went into like, you know, the basement after FTX because they didn't want that staying on their business. And so if you see that natural confluence of sovereign step in the bid kind of change from a geopolitical perspective, and then they get to announce it and launch their products. I think independent of how this turns out on the sovereign side, this bull market ends very long into 2026. Because similar to this chart, I think Brian, you had brought up and didn't fully appreciate it till it came over the weekend was the, the chart around RASI think it was Ras and other asset managers that still hadn't even turned on the ability to buy ETFs. Like there's just very small amounts of flow still coming into this space. And it's pretty bullish long term, but it's really just how, how long does it take? Agreed. I think that one other thing that's super notable here is just how banks and everybody that has their own view of the world and they want to try to fit Bitcoin into that exact view. So banks in the past just understand, OK, well, people will pay for trading, they won't pay for custody. We can just figure out what we're going to, you know, or we can outsource custody to somebody else. Maybe there is some benefit to retaining those customers for a long time period if they continue to custody with us. But you know, we've always had custody and we've never been able to make money on it. So why would we focus there? And so it's just kind of the natural B1 for them to focus on trading more than custody, especially because that's probably something that could be turned on a little bit quicker. But I think they're they're likely pretty green to understanding the asset deeply. Yeah, that's well said. And and what I have pulled up here is what Michael was referring to, which is more so looking at wealth management platforms, wirehouses and specifically their access and exposure that they provide to the Bitcoin ETFs. And you can see here that, you know, we're still early innings in terms of there's a lot of restrictions. There's only five names on here that have completely unrestricted exposure to the ETFs. There's a number that are still completely prohibited. And then there's a bunch and sort of that middle column where there's some amount of access, but there's, there's still restrictions. So perhaps, you know, advisors can't be soliciting on them or there's just thresholds in terms of, you know, which client can access and whatnot. So this is this is sort of still slow moving because so this this chart is from Tepper Digital. They've been putting this out on sort of a quarterly basis. And so this came out I think a week or so ago and the one a quarter ago, there really hasn't been many changes over the past quarter in terms of this access. So it it's, it's moving very slowly. Those shaded boxes there in the middle column are the only changes from the prior quarter. So there was actually no new entrance to the completely unrestricted exposure column over the past quarter. So this is all moving slowly. Mike, any other thoughts on this one? Yeah. I think going back to what Liam said is a very important thing to underpin whether it's from personal finances or anybody listening that looks to allocate capital in this space. It's like why I personally like pinch myself when I think about what we're building and then also investing in is because the only mental model or analogy I think about is like early Internet days when people were trying to build on the Internet and couldn't fathom what else you would do outside of e-mail or like you're a travel agent, maybe set at your own website. But then reality found out like, you know, Skyscanner came out and all these other things that were native where you never needed a travel agent ever again. And it was referencing the bank side to the banking side of things. Because the banks, to your point, they're integrating and they're going to let clients buy Bitcoin in custody yet, but they're not really developing their own custody solutions and nor should they because it takes a level of confidence. But also even if they developed or when they sub custody, they're ending up in omnibus accounts. So they end up in pooled vehicles. And that works for somebody that has one to two to 3% of their exposure. But as everyone knows, when they build a material position in Bitcoin, there's better ways to custody it from you wanted on chain, verifiable, segregated. You know, naturally you come into multi sig, maybe you're in collaborative custody and then you kind of grow out of that because you wake up to, you know, whether it's inheritance risk or technical risk, and then multi institution ends up as it's natural progression. That that's where we're talking with a lot of banks is because there's different formats to where this will go in in custody is just the first level, right? Because if you want to lend against the asset cross collateralization. So we're in very early days of if we all believe Bitcoin is going to be a core pillar or core anchor to somebody's financial well-being and portfolio, they're going to naturally seek out better solutions as we all did when we first came into the space. And so it's just still super early innings in that game. And yeah, I think it's kind of a joke when we think nobody talks about custody and it's all referred back to it's like, I love keeping this device on my deal because this is how the majority of bitcoins store. It's like we think this is the only way or Coinbase. It's like it makes zero sense if this is that radical and disruptive that we just figured out custody because this is always existed, right? Like the, you know, offline cold storage, I mean, that's gold. And then third party custody that's again existed forever and it's just like Bitcoin custody hadn't been figured out. And it's because everyone's been trying to solve a 3D problem in a 2 dimensional way, which is the way we've custody things for hundreds if not thousands of years. And so we get to express that view. It's still very asymmetric and and there's a corner of the market that's working on it. But if the belief is long term, it'll be growth. And I don't know the exact way to analogize it to early Internet days, but it feels very similar to year over year. The market forces will just show it and the price will do the work. Because as the price runs, counterparty risk increases because not everyone, whether it's a treasury company or custodian, is going to hold all the assets. The price appreciates. People get more fearful, whether it's Harvard or the individual, and they're going to seek out better solutions. 100% and and we're starting to see signs that people are are beginning to drop this friend of the friend of the pod Pierre Richard tweeted over the weekend we'll eventually see Bitcoin treasury companies use multi sig with keys in different non cooperating legal jurisdictions to maximize seizure resistance. And I I I had replied to this like we are building this feature at on rim. This is how we think, think things progress. As you were just describing, Michael, like Bitcoin at a protocol level, multi sig enables you to do things with the asset that couldn't be done with gold. You know, you can't multi sig gold, but you can Bitcoin and you can distribute that counterparty risk in a way that you know, he's right here. Every Bitcoin treasury company will eventually go down the path of realizing there's a better way to custody the asset, just like institutional allocators will have that same journey. Yeah, I, I think the treasury and fiduciary custody is, is a fun one to talk about because you can talk about your personal wealth. It's custody. It's very subjective. Everyone has different risk profiles, but it becomes very objective in my mind when it comes to managing other people's capital. Whether you're you know, ACEO or a board of a publicly traded or privately traded enterprise OR a endowment pension and your building a material allocation to BTC that you need financial controls and audits in place as it existed for all different assets. And to effectively give them all up to a single entity. And where for 15 years it hasn't worked out forever for most people because most exchanges or custodians have not lost it very long. There's a few, it doesn't make any sense. And so we see clients, we had a firm last week have APR release Occam's advisory. And then that's the most shocking part of this whole business building is that our clients have been the most sophisticated people on the planet earth because they've already kind of gone through the things we've talked about. They were in self custody, they were in collaborative custody that are at third party exchanges. Coinbase leaked all their data. Otherwise, we're getting hit up because their data is out there about, you know, stealing their Bitcoin and they naturally realize they have to like protect themselves with the right controls in place. And so, yeah, it's cool to see Pierre pulling that out. And there was a lot of comments in there about, you know, what we do and there's still a lot of questions. We're we're getting better and better about how do we distribute the information around who holds the keys, the legal governance. Like we talked about what happens if the key holder goes away on or doesn't even necessarily need to hold a key. We have multiple qualified custodians on board. We have multiple that we're adding. So there's a lot of flexibility in this. But at the end of the day, it's just standardization. Like for innovation cycles, whether it's electricity, railroads or you know, servers, you end up with a natural standardization over time because it's just a more efficient way to build. And as the market standardizes around this format, you will get more capital flows in and also less volatility because you ultimately have a better framework for the asset and specifically around losses because naturally we've seen a lot of these markets correct once everyone blows up. FTX was the last example. So yeah, it's it's very cool to see from Pierre. Yeah, exactly. And there's a nice parallel there between HCHTTP and HTTPS. Nobody really understood the need for a secure Internet browsing until there was known facts that everybody's information was leaked all across the Internet and that they were being tracked. And so similarly, unfortunately there's just going to have to be, and then everybody quickly changed to HTTPS. And so unfortunately, there may need to be a realization of somebody touching the stove to understand that there are more secure ways than holding all the Bitcoin with the single custodian and then the market will just coalesce around better standards. It's a good analogy because that reminds me of. It's probably not apples to apples, but it's closest to if you remember back in the day, nobody's parents would put their credit card info online. It was just like seen as insanely taboo. And then, you know, now everyone buys everything online. You don't even put the credit card stored there. And it's similar here where you think about the common person would never buy magic Internet beans because they associate N Koreans are going to take it or they're going to lose it. It ends up in a landfill. But once you have that democratized access, but also redundant and resilient, do the laws of cryptography custody, you naturally allow for all of that and then it'll be looked at as crazy in the future that like, oh, that we thought nobody, you know, it's just going to be a small niche asset or just something for, you know, a couple percentage point allocation from any portfolio. Hey, guys, hope you're enjoying the podcast. It was a great show. Went very deep into some of the nuance when it comes to custody best in class products, how the ETF landscape and Bitcoin treasury company landscape will evolve. For any of you know, listeners that really appreciated some of the undertone in in our logic in our directional thesis on how the market will play out. I'd encourage you to check out early riders.com and also a specific piece of research that was recently produced. Reckoning, reckoning with the new cost of capital, really discerning and explaining, you know, the benchmark rate or risk free rate is no longer there. But then ultimately, how do you actually measure against Bitcoin and then really ultimately build businesses and services that will accrete more Bitcoin? Bitcoin is a new harbor rate gets thrown out very often. But the reality is there's a lot of fundamental understanding of how to build, how to return capital that will be TBD on what it looks like in the market. We have a pretty fundamental thesis on how we build businesses, how we allocate to businesses leveraging that. So we return capital in the form of Bitcoin denominated units. So I'd encourage you to check that out and also just schedule time with us. Or if you want to learn more, we have a research that comes out weekly. We're going to be increasing that cadence as well as a weekly newsletter that really covers a lot of the business news and things that are happening in the space. So if you want to talk to us or just get engaged with what we're building earlywriters.com or you can shoot us a note as well at contact@earlywriters.com. Now I hope you enjoy the rest of the podcast. Alright, boys, any, any final words before we arrive here? 1:30 he says. All right, we'll see. We'll see how that Yeah, exactly. Keep. An eye out on these 13 F filings, probably some other interesting positions and I bet or similar assets still. Yes. All right. Thanks, guys. Thanks guys. Thanks for listening to this week's episode of the show. If you found the information valuable, please share the episode with a friend or leave a rating on your favorite podcast app. All the links we discussed in today's show will be in the show notes inside your podcast app. Before we finish, a quick reminder that on Ramp Media is for informational and entertainment purposes only, and nothing should be construed as investment or legal advice. Regardless of where you are on your Bitcoin journey, we'd love to hear from you. Visit on rampbitcoin.com/contact to schedule a consultation with one of our private Client advisors.
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