by the time Bitcoin is a million dollars you're looking at an mstr share price of a minimum of $35,000 a share at today's delution this is why I don't believe in that power law right and spaghetti boy and his because at the end of the day you got so much Capital here and the only thing that's going to happen is an s-curve adoption here and you're going to hit a J curve moment where all of this Capital not only has to study it but has to allocate and because of the finality the asent has to allocate now before the competitors do it so a term I heard you coin British was the forever cycle do you think this underpins the forever cycle what happens when trillions of dollars a year are flowing into Bitcoin to recapitalize that we're looking at a quadrillion dollar market for Bitcoin which is 1,000x on where we are now pricewise we could wake up to a 10x overnight once one of these central banks get serious about this so yeah what happens when micro strategy is a $500 billion doll company and it's not going to take that long do that and then they go and tell you 100% of that and the share price doesn't move that this gets scary real quickly because the biggest pools I look at and this is where the corporate bond offering is going to get really interesting I think Circ 300 trillion bond market that micro strategy is going to start harvesting really really hard I think the Sailor himself only mst's purchasing only puts a floor price of $40,000 for the next year $80,000 for for for 2026 and it's like what happens to this quote unquote bare market right so I I said you know mstr could blunt uh this bare market and I think that I I think the expectation of 21 billion over the next three years is going to be light I think they're going to realize there's a whole lot more Capital available than the 21 billion that they're after and I wouldn't be surprised if that number gets revised upwards two to three times from here let's not forget black rock is the second larger shareholder in micro right the reason why this model is working out is because I think if I was being a conspiracy theorist that it is a so Bitcoin has just hit a new alltime high this week and I thought hey it could be perfect timing to get the two most bullish people in Bitcoin on the same call so Peter British welcome today I think we should start talking about micro strategy because the gig chat himself has just announced to buy $42 billion worth of bitcoin over the next handful of years who wants to jump in and chime in on that topic first it doesn't matter we've both got bullish perspectives on this look at the end of the day how the how do you announc that you're going to basically dilute 100% of the value of the company and the Val and the share price doesn't move right that's what happened they announced $21 billion of ATM selling they announced $21 billion of debt borrowing and the share price basically said perfect the share price didn't move didn't do anything which shows you how hungry the market is for a volatile asset like micro strategy and i' I've been saying this like micro strategy is becoming a platform upon which uh you can if you're an Institutional Investor you can speculate on the underlying volatility or or the the the volatility of the underlying asset which is Bitcoin and that in itself is a financial product uh which is yes is because of Bitcoin but it's not uh exclusive to bitcoin this has been happening for years it's the reason why McDonald's got a lot of funding because you know that they wanted to borrow uh to a company that had all that real estate assets right so it's the same proven model it's just now being executed by sailor on on on bitcoin so it's it's phenomenal what's going on and and I think it continues to continues to chug forward I I think we've all conceded in the space that is the smartest of us as far as the bitcoiners go um in the corporate sense anyway and I don't want to degrade the the efforts of everyone to date but I think he's our best representative what's what's amusing for me from a a credit side of things is that he's just announced an additional 21 billion to an existing $4 billion of corporate bonds that he has outstanding and his business has free cash flows of $50 million if that so he has been able to leverage that up well over a thousand times his free cash flows to borrow money and the market will pay it they'll give it to him they want to throw money at him this is the thing that defies all belief and to your point the other side of that um balance sheet British is he's diluted the stock by 100% and it's gone nowhere and then he's just issued 21 million or announced to issue 21 billion in stock on cash flows of $50 million a year now tell me any balance sheet any household on Earth that would be allowed to borrow hundreds if not thousands of times their free cash flow yet here we are so yeah I mean put that in perspective for the listeners like again I want to double click on that he's bringing in $50 million of cash flow a year and he's essentially going to go out there and borrow nearly a thousand times that 50 billion nearly yeah and and the other thing that's really interesting and I'd love to hear british's take on this is that he's issuing it at cirker point less than 1% interest rate yet we've got the Federal Reserve issuing it between four and 5% so what you're telling me is micro strategy is now the risk-free asset in in in bonland yeah it is the it is the asset that everybody wants because it provides the most volatility for them to trade um and it's I mean the returns are phenomenal right we'll see what happens when these convertible bonds come up to come up to issue and I think they'll be subscribed again because you know where else can you find this level of volatility if you're a convertible Bond Trader at this point you just can't do it micr strategy is the only asset that's going to give you that best performing Bond best performing equity on Earth that's where this totally redefines markets and what I find really curious is talking to traditional Finance guys um I was chatting with a guy who's a stock broker who's a a Buffett acolyte absolutely loves his work and I said you've got to look at this stock I'd love to get your thoughts he said great what does it do I said it just buys Bitcoin I said it's trading it a two times nav it was two times a month ago um and he said why don't I just buy the underlying and I was like oh you don't understand it like he's basically buying it a discount so you want that premium and as that premium expands the ability to get discounted Bitcoin enables him to buy more Bitcoin at a cheaper rate so when bitcoin's trading at $70,000 and he's got a mnav at three times or three times market cap to the underlying Bitcoin he's effectively getting a 66% discount on the Bitcoin that he's buying and as that premium expands the discount gets deeper and deeper so this I'm not smart enough to figure out what could go wrong with this but it it looks like a really good setup for that mnav to expand and a lot of people look at that and think oh there's there's no way I want to buy an asset that's got a premium to the underlying net asset value to the company but in this case I actually think there in lies the opportunity not the problem and if you think about this from a valuations perspective if we think we're going into bull market for the next 12 months and we're going to get some I believe we're going to get somewhere between the 3 to 10x in the price of Bitcoin we're effectively paying next year's price for micro strategy today so we're only paying one year's times earnings because it's going to be that value the underlying is going to be the m in 12 months time from now and the addition to that is is that the convertible bond market doesn't give a about the about the mnav because all they want is the volatility so as long as they have the volatility side of it they don't care what the mnav is because they're not looking for exposure to the underlying Bitcoin they're looking for exposure to an asset a tool a financial tool that gives them the volatility that micro strategy gives them however micro strategy gets that is up to micro strategy but the actual convertible bond market is not interested in the underlying Bitcoin to a certain extent because all they want the asset to them is the volatility so you could see that mnav expand quite handsomely and they'll still keep buying and then you've got index inclusions that are coming in now the NASDAQ I think is on the 29th of November then you've got the S&P 500 uh into next year I think January time next year so there's just Capital here that retail is not going to be able to understand value investors are not going to be able to understand because the capital sailor has done a great job at basically turning micro strategy into a platform of speculation on bitcoin for which institutional Capital they have nowhere else to go to do this it is the only solution speaking of you know micro strategy You released a really interesting video yesterday British it was a coincidence I was just watching it this morning but mstr is up by like 2 to 3x on its 2021 price and my I actually expected a lot of people to be pushing Capital into the ETFs over mstr I've being shocked at how well MST has performed uh you know this year with the inclusion of these ETFs have you you got any thoughts on that kind of scenario British and yeah so I bought Ms the first transaction I did on mstr was August 12th 2020 which was the day after they announced that they were moving to a Bitcoin Treasury and I you know profited quite well off of that the mistake in analysis that I made was that I was looking at it you know kind of like a high net worth retail investor which was mstr was a de facto ETF because that's what I was told right this is a def facto ETF for two and a half years and then an ETF is coming out which is super efficient super you know uh it's just liquid right so of course msdr is going to be hit so I thought okay I'm have to trim back my mstr position and I was right for about three weeks and then I was incredibly wrong for about four or five months uh and now I've changed my thinking on it and I've realized that the way I I was looking at mstr as an ETF product but it's not it is an Institutional speculative product on bitcoin and that market doesn't care about mnav that market doesn't care about the ETFs that market wants volatility and it's going to get volatility one way or the other um and so there's Capital now that doesn't really care about what happens to bitcoin it just has to buy that volatility and it will buy that volatility and mstr is the only solution so why did it do so well it did so well because there's just pools of capital out there that are bigger than what people can imagine um that are chasing exactly what micro strategy as a financial tool is offering the biggest pools I look at and this is where the corporate bond offering is going to get really interesting I think Circa 300 trillion bond market that micro strategy is going to start harvesting really really hard I think I I think the expectation of 21 billion over the next three years is going to be light I think they're going to realize there's a whole lot more Capital available than the 21 billion thereafter and I wouldn't be surprised if that number gets revised upwards two to three times from here yeah what happens when micro strategies are 500 billion doll company and it's not going to take that long to do that and then they go and delue 100% of that and the share price doesn't move that this gets scary real quickly because that capital capital is always Peter knows this right capital is always looking for a home it needs to be productive and if msdr is going to offer that productivity then then then then that's where the capital is going to go which is why I put that video and I said I think you know by the time Bitcoin is a million dollars you're looking at an mstr share price of a minimum of $35,000 a share at today's dilution they so nuts that's the difficult thing and for us looking at this it's all a creative for Bitcoin micro strategy doing this so I think all bitcoiners benefit from Sailor aggressive acquisition of Bitcoin it's a it's a it's the first time I think in in history we've had a game that can be played that is not a zero sum game this is a game that everyone can benefit so um micro strategy shareholders Bond holders um and bitcoiners are all going to benefit from from this game that's I was fine yeah and remember he's putting a floor in the market right so for the next four or five years there's going to be a saor floor in the market he's not going to be able to dilute that ATM you know in Rapid fashion because it will murder the stock price but he's basically based on the schedule that they that they talked about and I did a video with Ben Workman on this on my channel literally today earlier today so I don't know when you're going to put this out but it will already be out on my channel when whenever we put this out um and we walked through that and it's like basically sailor himself only mst's purchasing only puts a floor price of $40,000 for the next year $80,000 for for for 2026 and it's like what happens to this quote unquote bare market right so I I said you know mstr could blunt uh this bare market and I think that is going to happen this time I'm more confident that that happens based on this based on this uh raise that they're doing a term I heard you coin British was the forever cycle do you think this underpins the forever cycle yeah I think you know I I think this is the type of thing that can do there right because imagine you've got this going on then you've got the US coming in with a 1 million Bitcoin strategic National Reserve you've then got at that point now every other company has to look at it right especially once it's in the NASDAQ cuz if you're an allocator to the NASDAQ you now need analysis on every company in the NASDAQ so now you're looking at what is the BET like we are about this is why I don't believe in that power law right and spaghetti boy that his because at the end of the day you got so much Capital here and the only thing that's going to happen is an scurve adoption here and you're going to hit a j you're going to hit a j jcurve moment where all of this Capital not only has to study it but has to all and because of the finality the asent has to allocate now before their competitors do it so none of that none of that none of that other price modeling makes any sense to me um and and because of all of this right you just don't understand how rapidly the capital can come in but it's never made sense British like this isn't something we're just talking about now we've been beating the drum about the power law here for a long time like all year uh and it's not just this recent micro strategy announcement to buy $21 billion or 40 $2 billion worth of bitcoin that's you know the reason why we believe the power law won't work there's so many reasons for why we just don't think modeling the price of Bitcoin is going to work do you want to dive into a few more of the reasons for why uh you think the power law is just a flawed model yeah I mean look I'm not a math PhD but I don't need to be to know that that's a piece of and that's the crazy thing about it right like I I don't understand I'm not a math PhD a physics scientist or wherever the he studied his from but I'm not sitting there going I'm going to look at the past 14 years of data and try and extrapolate it out into a curve and tell you what the prediction is when there's so much more demand coming in you know and and the conversation that I the debate quote unquote debate that I had with him started coming out with all Mania trying to say that you know the power law predicted when Larry Frink was going to come in the power law predicted when Michael saor was going to come in and it's just like doesn't make any sense Capital needs a home and we are about to rapidly find out what happens when institutions on an institution level at a you know retail capital is very slow right I'm sure Peter can can second this retail capital is extremely slow it drips once institutional Capital finds out what the opportunity here is with micro strategy Bitcoin and everything else it's going to be like a fire hose has been opened up because they need returns and the only thing that you can go you know compare it to is 2019 20120 on Tesla right go and have a look at what happened to Tesla when Russell 2000 asset managers were like we need a allocation right now and Tesla went vertical um that's what's going to happen with Bitcoin except the difference is you can't dilute Bitcoin right you can't just go and make more Bitcoin so now you have you know the it's just a revolving door of capital that has to keep coming in and and and that's it so no model that is basing it you know basing future projections based on previous previous events is going to succeed here and by the way even if it does a model that tells you I think the price of Bitcoin is going to go from $50,000 to $5 million and anywhere between there makes the power law correct you are a if you think that's valuable yeah I look at um the Tesla example you use I I like to think of the nickel Market that happened in Janu or March 2022 where the price of nickel went up 300% overnight now nickels a pretty common material we can mine as much of that as we want and you compare that to bitcoin like we could wake up to a 10x overnight once one of these central banks get serious about this so to your point British I think um maybe a little um softer on the tones of what I think about the power law because I'm interested in creating interest around Bitcoin from an academic perspective but I tend to agree that basically your your models will be destroyed when when this happens and then that won't account for a central bank buying it it won't account for like the thing we talked about before you know you look at U Microsoft or apple they've got a thousand times the free cash flow that micro strategy has what happens when they Implement a Bitcoin strategy like like micro strategy all of a sudden there's just unlimited demand for this thing and there really is unlimited pools of capital that can can be foed into it so I I look at this and think this can happen a lot quicker than we thinking to your point earlier there's so many things happening for micro strategy that are going to put this and this strategy um on a global footing um and and people won't be able to ignore it anymore because it'll be in their face and then you've got Tailwinds of you know F big accounting real changes happening first of J next year possible inclusion in the NASDAQ any of the other Industries S&P 500 all of a sudden like people are going to have to buy this and pay attention and once they you know sort of peel the onion layers back and realize what this thing is I think it's going to inspire a whole host of people to do this and this is where um say in the S&P 500 nearly 20% of the companies in that um index are zombie companies just existing to meet interest payments all of a sudden they now have an opportunity to take on a growth strategy that exceeds apple or Nvidia or anything else in the market so I look at this and think this could be a renaissance this could be a golden era for us Capital markets and all all financed and Powered By Di and let's not forget who's actually behind this right is President Larry FR right at the end of the day I don't care who the you're voting for uh in America whether you think you're voting for Donald Trump or Camala Harris at the end of day the real president is Larry fing and we know how powerful black rock is at moving Capital around the world and he himself said it on the earning score he said I'm paraphrasing but he basically said it doesn't matter you know who the president is Bitcoin is becoming an adopted asset and it will continue along that adoption curve so you know as Bitcoin becomes an ESG 2. 0 asset as Bitcoin becomes this growth good for environment etc etc blackr is going to help companies do this I think micro strategy let's not forget blackr is the second largest shareholder in micro strategy right the reason why this model is working out is because I think if I was being a conspiracy theorist that it is a it is a blueprint testing round for how we re wake up the American Stock Market like Peter said I think uh I I I you know and when you study how black R moves this is how they do things this is ex this is why when I was talking about you know all the moves that are going to happen after the ETF was filed for it's why they came true because there's only they have a working blueprint for how to make an asset a fully adopted asset in a capital Market they are professionals at it and it's going to happen what happens when you know Black Rock who I guarantee you right now understands that one of the advantages of Bitcoin versus their previous favorite asset which was real estate due to the mortgage back Securities and everything else has no societal you know drawbacks you can pump as much money into Bitcoin as you want make it go to the moon and make it come crashing back down and do all kinds of things no one's going to be homeless no one's going to jump out of a building because they can't pay their mortgage there is no societal negative impact based on using Bitcoin and and as an asset to pump extra Capital into what happens when they realize right what happens when they start implementing that strategy property prices start coming down you start losing monetary premium in real estate um and and by the way property prices don't need to technically come down in dollar terms they can come down in value terms simply by just keeping them stagnant for the next 10 years right keep property prices stagnant for the next 10 years and suddenly you have a rebalanced property portfolio in in property Market in the US so there's a lot happening here and it's all happening at the stem of Black Rock and what what Black Rock uh is envisioning for this product so this is just not going to stop to that point you actually remove the risk from Main Street and you allow Wall Street to speculate with absolutely unbridled volatility they actually love the volatility they want it and all of a sudden you remove Main Street that that is the ultimate win and then when you pair the US Treasury Market with Bitcoin you've got two assets you've got the risk-free asset and then you've got Bitcoin which I believe is the risk-free asset you can you can go absolutely Wild on speculation and volatility in markets and remove Main Street from having any Downstream consequences like they had during the GFC that's a really really important Point let's talk about the treasury market and Bitcoin because maybe a few months ago here Peter you gave me a buzz at about 12:30 a. m.
my time we're on the other side of the world so it's probably during the day for you and we had a chat for about 30 minutes or an hour and you're just telling me how Bitcoin could be integrated into the debt market and how it could be used as collateral do you remember that conversation and if so I'd love to talk a little bit more about how you envision that unfolding Bitcoin working alongside the debt markets I I think the the primary reason for this was creating a principal protected note and what that means is that would allow um Bond markets insurance companies and bank treasuries to participate in the upside and the volatility of Bitcoin but it would also capital guarant the investments in nominal terms to it and so how that would work and this only happens when interest rates are at four or 5% but say you've got a 5year um principal protected note that you would issue issue $10 billion worth of it and you buy $8 billion worth of Treasury and with that remaining 20% you go and buy Bitcoin with it because your 80% over a 5year period will grow to the nominal cash that you put into it by the end of the term but that then lets you put 20% of the the portfolio into Bitcoin and ride the volatility um with Bitcoin for the next 5 years and by my calculations um backdating it it it would give a return of about risk-free return of 177% per anom by having 20% of your portfolio in Bitcoin so all of a sudden this is a new way of pricing um and potentially recapitalizing the US banking sector which I think our banking sector across the globe is um is in huge trouble from a liquidity perspective I think we're effectively um trading and solvent but this is an opportunity if the government gives a tick that they can hold this as good as treasury this is a way for the US Banks to recapitalize themselves so I look at that and think here's the opportunity we could have tens of trillions of dollars flow into that type of product you know we're we're issuing Circa I think it's I think it's about 10 trillion uh dollars worth of bonds annually what happens if five or 10% of that was to flow into bit Point all of a sudden we've got 10x or 50x what micro strategies doing in the next 3 years with that single component so I just look at the demand driver of that and that's a way to capitalize the markets and this is where actually I think you two have done the most work on this um in the last few years the multiplier when you've got that much money coming into Bitcoin to funnel into it all of a sudden that Rec capitalizes the markets way faster than any other investment that the banks or the treasuries could make so what happens when when trillions of dollars a year are flowing into Bitcoin to recapitalize that we're looking at a quadrillion dollar market for Bitcoin which is a THX on where we are now pricewise bitcoin's got that quadrillion dollar T micro strategies looking at a $300 billion debt Market I I think I don't think anyone is paying attention to what could potentially be coming in the next five or 10 years uh speaking of the next but do you know how we know what's coming because we can Char it in a power law get the out of here exactly we're speaking about this cycle and power LS British what do you think are the biggest things we should be paying attention to over the next 12 months I don't want to put a guni ahead and say what probabilities uh do you put on us reaching X number but what do you think of the biggest drivers that could potentially make this next cycle different now I wanted to quickly interrupt today's interview to give a massive shout out to our lead sponsor Rhino Bitcoin Rhino is a Bitcoin banking solution that combines traditional Financial Services with the power of Bitcoin created by bitcoiners for bitcoiners Rhino offers a range of different Services you can buy Bitcoin you can sell Bitcoin you can withdraw straight to cold storage and you can even pay other people using the Bitcoin lightning Network you can also purchase gift cards with SATs at the click of a button and you can even connect a multi- signature setup to Cara all by using the Rhino application Additionally you can even send cash globally to your family and friends using rhyo and soon you'll be able to pay bills borrow money against your Bitcoin and even save Bitcoin for your retirement all in the one seamless application you guys can visit rhob bitcoin. com to download Rhino today and experience the future of Bitcoin banking there's two things right you got to look at what could drive the peak and then what could create a Flor that's high enough to scare the out of people to get into the asset because everyone right now based on their Infinite Wisdom of four data points is telling you that there's going to be an 80% correction etc etc we've just walked through two or three Avenues of capital we haven't even touch the fact that there are real estate funds that are going to be coming up for maturity that need to get into something else we haven't talked about there's equities funds that are going to be coming into coming into the market we haven't talked about any of that right so you should think about about who's driving the capital what their incentives are to drive that Capital why Bitcoin is a better alternative than what they were putting it into and then you can analyze what you think is going to happen to the market what I think is going to happen to the market is I think we're going to I don't think we're going to see you know a million dollar day right we could but I don't think it's going to happen right now I I think that we're going to drive up we're going to there certainly going to be unbelievable days we're going to drive up and then then it's going to start turning around and people are going to go here comes the crash and then there's not going to be that much of a crash right and it's going to come down correct it's going to correct somewhere in the region of 50 to 60% and then go back up again right and I think it will do this uh based on the amount of capital that just has to find its home and the amount of capital that's being directed towards Bitcoin so we have and by the way we haven't even got into you know hopefully the US Administration the next us Administration being friendly to bitcoin yet and what that brings along what happens if they start extending you know uh financing to bitcoin miners in the US to build up you know strategic uh resources in the US all these other things that are happening that are that are unreal we also you know micro strategy borrowing money at 0% right they're borrowing money at 0% to buy Bitcoin we haven't even talked about the infinite scalability of that like this is all just happening at this moment in time black Rock's in charge of this I'm firmly in the in the chair that this is a black rock driven Mission here and Bitcoin will emerge as ESG 2. 0 as ESG 1.
0 is completely and utterly failed with a 5.
