The Best Bitcoin Buying Opportunity In History | Peter Dunworth

18:27What Bitcoin Did Host:And I think what we're seeing is we are in a hugely uncertain world right now, geopolitically, politically, macroeconomics, you name it, it's all up for grabs. There's no real certainty around what we have. And there is a disruption to the current business models that are making the day-to-day investment that we're used to for value investing become very difficult. And this is where, if you have a look at, say, Warren Buffett's performance since 2000, when some laws changed, where he wasn't allowed to get insider information, the return for Berkshire Hathaway have basically mirrored the S &P 500.

19:04What Bitcoin Did Host:And I look at that and think, well, that kind of says it all. There's certain parts of the market which are extremely volatile, and they're going to continue to do that because that represents the growth and opportunity that lays ahead. And then the traditional space, I think, is going to get disrupted because Because that traditional space, I think, has huge headwinds ahead of it because over the last 20 years, rather than actually building productive businesses and working on the business, what they've done is they've financially engineered their balance sheets to create a better outcome. They had this stupid idea from business school, which worked for SharePrize, to have – they wanted to not have lazy balance sheets.

19:47What Bitcoin Did Host:what they wanted to do is they didn't want to sit on big amounts of cash. They wanted to basically run really lean. They wanted to have really high debt levels so they could basically say, oh, we've got a really great return on equity. Look how efficient we are with your capital. And what the problem with that is, is that when you build up debt on the balance sheet, it makes you extremely fragile from withstanding any sort of monetary hit or downturn in your business. And so, although it looks really good from a return on equity perspective and look how great, we're growing and all the rest of it, it creates a vulnerability to the success or long-term success of your business.

20:22What Bitcoin Did Host:Then I think what we're seeing right now is the fragility in the system build up with those traditional businesses, whereby they've over financialized their balance sheets. They've been too smart by half, and it's now making them vulnerable at a time when AI is coming in and disrupting these businesses like we've never seen before. And this is where, say on the day-to-day when I talk to clients about businesses with, you know, that want to pay dividends and they want portfolios that create, you know, a dividend income that they can rely on. I don't want to be investing in those types of companies because they're typically companies with high debt ratios.

20:59What Bitcoin Did Host:They've got vulnerable income streams that I think are going to be disrupted. And the income that the client's relying on, I don't think they can rely on that for too much longer. And this is where you really want to focus on total return versus income because by the time you pay the taxes on total return, you're going to pay a much smaller amount of tax and you're going to get a much better outcome from a return perspective. But you've got to be comfortable with watching the volatility of your portfolio go up and down and not putting your head on the pillow at night thinking, isn't it wonderful, I've got a 5 % treasury note that will never go down.

21:35What Bitcoin Did Host:It's like, no, you need to look at the big picture, you need to understand you're being debased, you need to understand you're getting ruined from inflation at the same time. And a lot of people, as they get older, I think they just don't want to deal with that. It's over. Like, just let me have my 5%. That's all I need.

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23:52Peter Dunworth:Swan have helped over 100 ,000 clients since 2020. And if you're serious about acquiring and securing Bitcoin, I recommend Swan. Meet the team at swan.com forward slash wbd which is swan.com forward slash wbd so just a minute ago you were talking about the clarity act and you said it allowed to print as much money as possible

24:12What Bitcoin Did Host:what do you mean this is something i've not heard before oh so this i haven't i've yet to hear people talk about the clarity act in this term but the clarity act will enable the u.s banks to print as much money as they want and distribute stable coins globally. Now, what that means is you have a captive buyer for the treasuries that are required to be purchased to issue stable coins. And when the treasuries are being purchased, that basically gives the US government the ability to sell the treasuries, which they haven't been able to successfully, to new buyers. And what this is going to look like, I think, and I'm yet to hear anyone talk about it in this detail, but it's going to look a lot like the EU's euro that they developed.

25:01What Bitcoin Did Host:So they conglomerated a whole host of European countries, with Germany being the major manufacturer, France, England, the rest of it. When that came out, what that basically did was that allowed the Germans to basically sell their goods and make huge amounts of money. Exports went out the wazoo. They were hugely successful with that because they effectively lowered the value of their dollar. What that meant was they distributed a lower interest rate to the poorer economic countries in the EU, but at the same time, that enabled the German manufacturers to basically take advantage because they had a weaker dollar.

25:37What Bitcoin Did Host:Now, I look at that, what ended up happening was all of the economic development happened in Germany and France, and the rest of the EU countries basically went by the wayside. The payoff was that they got to access cheap interest rates from the EU. Great deal. Everyone wins, sort of, but not really. And we're watching the manifestation of the last 25 years, well, the last 20, yeah, 25 years or so of the euro come undone now because you're seeing, I guess, disharmony in Germany, France, Greece, you name it, all around. No one's happy in the EU. I look at what we're about to embark on with the Clarity Act and the stable coins that are basically going to get issued around the world.

26:18What Bitcoin Did Host:You've got the US basically going to issue a global reserve currency that everyone around the world will be happy to use. And the reason why they'll be happy to use it is because it's far better than what their current option is. It'll be better than the New Zealand dollar. It'll be better than the Aussie dollar. It'll be better than the Chinese yuan, although they probably won't let that happen in China. It'll be better than the euro. It's going to be better than any other currency. And what we're going to see is a flood of capital into that stable coin because it's better than that. And at the same time, what that's going to do is that's going to disrupt and destabilize local federal governments because it undermines their ability to print money and do what they want because the local population is going to want to use a US dollar rather than a peso or anything else.

27:05Peter Dunworth:so that's one of the arguments i totally understand it when you're talking about a country like the obvious example that everyone always uses argentina like they went through periods of really high inflation um and so you don't want to save in the venezuela in the argentinian peso so you would i get that they would want to save in the us dollar but like for me in australia i mean maybe i'm a weird case because i don't really save anything in dollars i have it all in bitcoin but like i wouldn't want to use it as a like would you be able to use it as a transactional money? Would I be able to go and buy things with it?

27:36Peter Dunworth:100 % you will. Absolutely. Why? What's going to make the coffee shop down the road to accept it? They're going to mandate it.

27:47What Bitcoin Did Host:It's not a choice of why would you make them accept it. The coffee shop owner is going to figure out, hang on a second, this US dollar doesn't go down in value, whereas my local currency goes down 15 to 20 percent per annum the local coffee store is going to mandate a stablecoin payment on it

28:04Peter Dunworth:the thing that this just kills me is just i wish they would just accept bitcoin we need to push the bitcoin message further um so do you think that really is like the the start of the death of i think there's 180 currencies in the world do you think in 10 years time we're

28:18What Bitcoin Did Host:going to be down to like 20 yeah i do and i think they're all going to be basically surrogates of the US. And you look at how China works their currency. They've got the Chinese yuan, which is foreign, and then you've got the onshore dollar, which is the renminbi. The Chinese run two sets of books. Now, even Blind Freddy can tell you someone running two sets of books is basically conducting a fraud on you. So the US, and not saying that this is a fraud or the renminbi is a fraud or whatever, just to get out there and clarify, I don't want to get sued by anyone. but what the stablecoin looks like is they're going to issue stablecoins and the stablecoins are going to look like the Chinese yuan.

28:59What Bitcoin Did Host:That's going to be the euro dollar for America. That's going to allow them to control capital flows and be very beneficial to the US. At the same time, they'll have the onshore US dollar, which will be controlled by the local banks as well. So all of a sudden, liquidity flows are going to basically be controlled outright globally by the

29:19Peter Dunworth:U.S. Because the benefit that the U.S. have in that, which Germany never had, is they don't have to look after all the other states in their union. Like Germany becomes like the big daddy of the EU and has to share money with Greece and the other failing states, whereas the U.S. doesn't have to do any of that, but they still get to export their dollar. Is this kind of like the U.S. just completely dominates in this situation?

29:43What Bitcoin Did Host:Yep. 100%. Is that good for the world? yes and no i look at you know the the us has been a pretty good provider as far as a world leader goes they've done some shitty stuff sure but on the balance of things they've been quite tempered with their response to a lot of things and i think if you asked someone would they want the us dollar or their local currency i think nine out of ten currencies would jump at the opportunity to have a US dollar as their stable currency. The people would, for sure. The governments might not. Well, this is going to be the clash that we're going to see. You're going to have governments try and enforce and ban the US dollar stable coins, and you're going to have local people want that.

30:28What Bitcoin Did Host:And this is going to cause great friction across the world, I think. And this is where, although I don't want to endorse the US dollar, I think it's really important that the US dollar... it's what I term as it's better bad. Yes, it's bad, but it's better than what the alternative is at this point in time. And the problem is, and this is where I think maybe Bitcoiners, libertarians suffer the same fate is, unless it's perfect, we don't want to have an improvement. We will die with the current system rather than say, look, nothing goes from zero to 1 ,000. You have to have incremental forms of improvement.

31:05What Bitcoin Did Host:And I look at this and think, is the US dollar better than, say, the Zimbabwean dollar? 100 % it is. Is it better than the peso? Yes. So if we're continually improving that, it just gets us down to a point in time where the future will look like the US dollar and Bitcoin. And truth be told, the beautiful thing about having a US dollar and Bitcoin as the two major currencies globally is that Bitcoin can go up forever when the US dollar exists, but it cannot go up forever exponentially if there's no US dollar.

31:38Peter Dunworth:So I never know which side of this I fall on, whether I think stable coins can help Bitcoin adoption or if they hurt it. Because if you're in one of these countries with a poor currency and you have the option of Bitcoin or a US dollar stable coin, I think the obvious stepping stone is the stable coin. It makes more sense to you initially. And then people use the idea that once you're on a stable coin, once you're on sort of cryptographic rails, it's easy to get to Bitcoin. I just don't know if that part's true. Like, I don't know if this actually delays the adoption of Bitcoin by giving them a better alternative now.

32:09What Bitcoin Did Host:That's a really good question. I'm torn on that too. I don't have an answer, but one thing I will say from the research I've done is it looks like 20 % of all issued stable coins ends up in Bitcoin. So I look at that and think, well, that's a lot. And although it's not perfect, it's still better than nothing. And so I look at that and I'm really torn. I Like you, I don't know where to fall on this side of the argument that I think there is benefit to stable coins. I think at some point in time, having used them personally, I think there's great benefit to them, particularly for short-term purchases.

32:44What Bitcoin Did Host:For long-term savings, I think it's a horrible vehicle. But for people who need to conduct business, who have got volatile swings in their own currency, having a stable coin to fall back on for short-term purchases and receivables, accounts payable, things like that, is wildly beneficial. And this is where, with Bitcoin and its volatility, I think it's difficult for anyone with less than a 12 to 24-month time period as far as payments go to really want to be saving Bitcoin from a short-term perspective. long-term, undefeated. But that short-term use case is very difficult for risk-averse people to want to save in Bitcoin.

33:24Peter Dunworth:Totally. And don't get me wrong, I think everyone should have the option of having better money. I just think Bitcoin is the best money. But maybe the flip side of that is if they have a slightly more sound money in the US dollar rather than whatever the local currency is, maybe they're able to save better and then maybe they actually have capital to put into Bitcoin.

33:40What Bitcoin Did Host:That I think is a huge thing. And if you look at, say, how I use Bitcoin as a savings tool, all of my savings go into Bitcoin. And I guess the big thing about having that is I don't have the concern about short-term day-to-day fluctuations of Bitcoin, basically because I've sat in it for a long time. But I've got the equity built in that, that I'm not worried if we have a 10 or 50 % drawdown in it. I understand that's part and parcel of what it is, but given where we are in the adoption phase, I think less than 5 % of the globe has really adopted Bitcoin in any meaningful way. And I'd actually say it's more like less than 1%.

34:20What Bitcoin Did Host:You need time to build up that equity base that you hold in Bitcoin. And for that reason, I think it's really important that you've got a less volatile version of it, aligned in some way, shape or form from a cryptographic perspective with Bitcoin. That's not Bitcoin and the stable coin. I think it does serve a purpose till everyone's on board it. Once everyone's on board it and has had that, then that's a different story. But we're a long way from that.

34:51Peter Dunworth:Yeah, totally. Bitcoin right now is at$62 ,500. 100 um i actually once when we hit 60 last time i actually didn't expect us to go back here obviously totally wrong um do you think this is like we are forming a bottom here do you think

35:06What Bitcoin Did Host:we're close to the bottom we have to be just statistically speaking we've had a 50 drop from where we were um if you go back over the last major crashes for the last 10 or 15 years you've typically seen an 80 to 85 % drawdown. In a worst case scenario, we're 50 % of the 80 % there, so we're more than halfway to the bottom, I think. Do I think it's going to go much lower than that? I don't. I think we're pretty close to it. If you look at a cost basis, you look at a whole host of other measures, I can't see it really dropping more than 30 % from here. We're already at a very low rate. We didn't have a huge blow off top.

35:47What Bitcoin Did Host:We've come off dramatically. There's a number of reasons I can give you for why I think we're at great value here. But typically, I suffer from a very optimistic bias when it comes to Bitcoin. So I'm probably not the best person to talk to with that respect because I always think it has the opportunity to double overnight. So any opportunity to buy at a 50 % discount to all-time highs looks like a great idea to me.

36:11Peter Dunworth:Yeah. I mean, I'm the same as you. I'm always way too bullish. But like 30 % from here would take us to 44k yeah i just can't see it like it might happen and if it does call i'll buy some more bitcoin i just can't see it i just can't see it happening i mean a great buying opportunity maybe set set a you know basically a finish your savings account buy at 45 000 and if it gets there

36:35What Bitcoin Did Host:then what a gift but it won't be there for long i think it'll go down touch it and then you're away

36:40Peter Dunworth:it's done you won't say that again there's zero percent chance i'll have anything in my savings if we go that low yeah but uh and and so on the flip side like whenever this does turn obviously there's there's a long way to go to even get back to all-time highs now but do you think the next cycle is just going to be like part and parcel everything we've had before where it's just a bit higher like 60 higher rollover again or do you think that the dynamics are going to change change?

37:06What Bitcoin Did Host:I think they have to change. And like markets always continue to evolve, it'll be difficult getting a read on what to expect from the future. But I look at the amount of capital that is going to be sitting on the sidelines. And when we breach all-time highs for the next time, I think there's going to be latent capital that's just sitting there ready to move. I think there's a huge, huge market opportunity for Stretch and those treasury companies with their preferred stocks, that's an insatiable market that once we get back to that all-time high, their balance sheets look absolutely squeaky clean.

37:42What Bitcoin Did Host:They're going to get so much capital driven into those things. That to me could be the tipping point where once those things start humming, the amount of capital they've got access to, the$300 trillion market, and really it's an unlimited market because they can just print money to buy it, you're going to see that might be the tipping point that basically puts Bitcoin in that upward trajectory and we never see it go back again. Not like this anyway.

38:08Peter Dunworth:I know you've been sort of quite heavily following the treasury market play. It's been interesting to see Saylor getting so much heat over the last few weeks. Like, do you think that's just bear market things where everyone's angry and looking for someone to blame? So they're blaming the guy that buys all the Bitcoin? Or do you think there's something deep to that? And you think there is something maybe systemically wrong with it?

38:27What Bitcoin Did Host:oh look i think there could be a bit of truth in in all of it but you know what i just think it's sour grapes why don't i have 850 000 bitcoin well i wasn't smart enough so just look at it and i think like really that's what we're complaining about the guy who bought 850 000 like can you imagine being sailor and all of these done and you've got to deal with people just giving you shit for buying Bitcoin. It's like, you just would think, like, he must be so reserved to just stop turning around and saying, what have you done for Bitcoin lately? You know, he's bought$850 ,000. He's holding up his end of the bargain.

39:04What Bitcoin Did Host:I'm doing my very best to buy as much of it as I can. Like, at some point in time, it's like, hey, that said, you know, these type of, I think, Sailor being attacked in the way he is, is really, it's just case in point of exactly where we are in the market. Yeah. And this is where people want to eat each other. When we're near or at the bottom of a bear market, people are very unhappy. People have made decisions. It's like, look, you can only control the outcomes for the decisions that you make. And, you know, when people start looking around and attacking others, typically the problem lies with themselves, not the person they're attacking.

39:45What Bitcoin Did Host:So I think in the middle of a bear market, it's probably best to be introspective about what you've done rather than look for people to blame. And that's probably a wider thing, a wider mentality to take through life, which I think will lead to a much happier existence.

40:01Peter Dunworth:Yeah, no, I agree with that. I think it's just classic bear market things. But it was interesting to see him sell Bitcoin. And I don't know if I've not seen if he's publicly said anything about why he did that. But do you think it's just to get rid of the notion that they'll never sell. Yeah.

40:16What Bitcoin Did Host:And I think that would be around the S &P 500. If he's made notions around never sell your Bitcoin, there's probably 10 or 12 tweets that the S &P could turn around and say, we don't believe you're going to sell your Bitcoin because here are multiple examples of you tweeting to the world that you never sell your Bitcoin. You sell a kidney before you sell your Bitcoin, I think was one of his tweets. And it's like, Is this really the responsible type CEO or chairman that we want to have in the S &P 500? And I think what I've seen in the last, say, month is that the S &P 500, that institution, the NASDAQ, what have you, they really have the power to do whatever they want to do when it comes to breaking the rules to let people in to that S &P 500.

41:04What Bitcoin Did Host:And they've broken rules for SpaceX. They'll probably break rules for Anthropic and OpenAI to let them straight into the index. And they're very strict with Sailor and MicroStrategy. And I look at that and think, that's basically where we are at the moment with the DOD endorsement of AI as an existential threat to the US. So as a country, they are going to put pressure on everyone doing whatever they can to get that broadly adopted and integrated into markets. And part of that is basically having a standard buy for the S &P indexes and the NASDAQ indexes. So interesting how it's a two-tier system, one for Bitcoin and one for AI.

41:45What Bitcoin Did Host:But once that damn bursts, I think it'll be a very different situation.

41:49Peter Dunworth:So the money that goes into it is weighted to the top companies. Where would strategy fall in that and how big do you think it would be?

41:56What Bitcoin Did Host:Good question. I'm not sure where it would fall now. Last time I looked at it, it would be about 124, but I actually think it's a lot lower than that now. And it'd still make the S &P 500, but where in that, I'd only be guessing, but it's lower than 125. So it's not that. And this is the weird thing about those indexes and what they don't tell you is that the bigger you are, the more weighting you get and the more passive flows you get, which reinforces your position in the stack. It's a very strange thing that's been created with the index investing. And I think there's going to be a come to Jesus moment for the index funds and the entire industry when it comes to that.

42:38Peter Dunworth:Especially with the AI disruption of loads of those companies, it will be a very harsh reality they'll have to face at some point, you thought.

42:46What Bitcoin Did Host:Big time. And a lot of those indexes are really unevenly weighted to the future and that AI trade. So this is why I think the S &P and the NASDAQ were very keen to make any allowances they could have SpaceX immediately into that index because it would give them a huge boost too.

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45:57What Bitcoin Did Host:actually first before we get into this very good well um i run a business called the bitcoin advisor and what we do is we help people procure and secure their bitcoin in a form of self-custody So Bitcoin and buying Bitcoin is not as easy as you'd think it would be, particularly after being in existence for 15 years. And a lot of people need help with not only purchasing it, but securing their Bitcoin in a self-custodied manner that ensures they're not going to lose it. And this is where there's a big technological leap that needs to, or learning curve that needs to happen in order to do that safely.

46:34What Bitcoin Did Host:and I'm really proud to say that we help people self-custody their Bitcoin in a manner that ensures they're not going to lose any of it and I'm proud to say we've never lost a Bitcoin with our clients and we deal with a whole host of clients from baby boomers right down to teenagers and we help them look after their Bitcoin and secure it not only for themselves but for our older clients probably the biggest concern is not so much the Bitcoiner in the family but making sure that they can pass on their Bitcoin if something happens to them, i.e. that inheritance base that we talk of all the time.

47:10What Bitcoin Did Host:And this is where having a number of professionals help you with your self-custody is actually really beneficial because over the last, say, 10 years giving advice in this space, sadly, we've dealt with four clients who have passed away. But I'm really proud and happy to tell you that their beneficiaries got all of their Bitcoin. Despite not having a clue how to recover it, we were able to help their estate, pass that on to the beneficiaries, and everyone got the Bitcoin that they were owed with their last, well, their fathers or husbands or wives' last will and testament. We've been able to distribute that, and everyone's got their Bitcoin.

47:53What Bitcoin Did Host:So I think the consideration with a lot of Bitcoiners is they think, why would I need help with self-custody? And the Bitcoiners don't need help with self-custody. Let me tell you, every Bitcoiner listening to this right now knows exactly how to do it. But the question is, to the loved ones that they're leaving their Bitcoin to, do they understand how to recover it? Do they know how not to lose it? And that's where the difficulty comes in. That's the fly in the ointment for most Bitcoiners.

48:21Peter Dunworth:yeah that's awesome you're securing generational wealth um and the other like the other piece that is not only do they know how to secure it and how to look after it like once they've had that passed down to them it's do they know enough about what it is to know that they shouldn't be selling it like i imagine you do so like an educational piece in there as well uh you're orange pilling people at that point but um i i can also imagine over the last few weeks few months that you've had a lot of calls with people saying what the hell's going on uh how are people dealing with it

48:52What Bitcoin Did Host:I think there's two modes, two different types of clients. There are clients who have been in Bitcoin for a long time and they look at this as an opportunity if they're underweight Bitcoin to buy more Bitcoin. And then there are clients who are new to Bitcoin who are looking at this really without the deep understanding of what this is, thinking, hey, am I losing my shirt? Do I need to be selling? Has anything changed? And we get a lot of calls basically asking that exact question. Has anything changed? Do we need to be doing anything? And that's the opportunity to talk to clients and say, hey, this opportunity doesn't come around very often.

49:29What Bitcoin Did Host:And this is where I think it's really important when we're giving advice around Bitcoin to be very honest with clients up front. And when we're starting the journey with clients, we talk of the fact that most clients will never put in what they would allocate to Bitcoin in their first purchase. And with that in mind and having that understanding, I think we set expectations very early up front. And we say, look, we want you to put in, say, 5 % or 10%, whatever the number is, into Bitcoin. And they typically put in half what they're prepared to. And when we see that it's half of what they talk of, facetiously, I tell them, look, I just need to tell you that, you know, the day you buy, it could drop 50%.

50:09What Bitcoin Did Host:And when it drops 50%, I'm going to come back to you and we're going to have the discussion around, you know, the 50 % that you didn't put in. Now's the time to buy that other 50 % that you didn't put in to dollar cost average down. And this is where I think a lot of time spent with clients explaining it, how that market works, the opportunity that lies in front. And really, this is where, not that we talk about this, but it really needs to be looked at not in isolation, but really is a whole picture of their financial health. at this point in time, where do you want to allocate money? Do you want to allocate money to the AI sector where it feels like it's at all-time highs?

50:46What Bitcoin Did Host:Do you want to be allocating the software sector, which is getting disrupted by AI? Do you want to go into the commodities market, which seems like maybe a questionable investment? Can you be investing in property right now? To me, property is near uninvestable across all of Western countries. And we're about to see probably a 20 or 30 % drop in Australia. The US has had troubles because they've got a very high 30-year fixed rate. The UK's had its problems. New Zealand's off 20%. So you need to have a look at what are you investing and what's the opportunity cost of investing in Bitcoin? And when you look at all of the other options from an investment perspective and you boil that down to what the upside is for Bitcoin over the next 10 years, which I still believe we've got 100x in front of us in the next 10 years, Bitcoin becomes undeniable and that word again is going to pop up when Bitcoin breaks an all-time high in the next however long it takes.

51:41What Bitcoin Did Host:There's going to be a lot of capital on the sidelines that is going to chase that and that's where we'll see a real pop.

51:47Peter Dunworth:I love it. We've got to talk about property because I'm glad you brought that up. I know you know this but I've been looking at buying a place here in Australia for the last like six months or so in no rush and Bitcoin's price has probably delayed that a little bit. But the interesting thing, as I've been keeping a close eye on it, is there's so many houses that are going to auction and not selling. There's things that are hanging around for a very long time. The property market here does seem like it's in a really bad spot. I don't know what it's like across the rest of the world, but I'm guessing it's similar.

52:20Peter Dunworth:Another little piece on that is I've seen the property price in London have basically not changed in a decade at this point. What's going on? Why do you think this is happening? And do you think this is a long-term sort of bear market in the property?

52:37What Bitcoin Did Host:Well, let me talk to the broader market globally, and then I'll focus in on the, I guess, the limitations from the Australian sector. From a global perspective, I think we have reached peak debt. And the problem with peak debt is that we can't afford to borrow any more money. And if you look at how property prices and capital growth are driven, the two key factors for property growth are, well, outside of interest rates, which are really dictated by inflation. But outside of interest rates, the two key factors which drive property growth values is immigration, i.e. more people coming into the town to bid up property prices, and credit growth.

53:24What Bitcoin Did Host:Is credit growth growing? Now, I've told you, and literally I've talked about this probably for the last three or four years, where we are literally saturated. We are up to our eyeballs in debt. We can't afford any more debt. And now we've had interest rates go from 0 % to 5 % in the US. Everyone is choking on debt. Now, the only way to get capital growth back into these properties is to lower interest rates and allow the borrowing capacity to go up so they can issue more debt to have higher prices. That's what's happening on a global scale. So I look at that and think it's going to be very tough for global property to go up because we're basically we're hamstrung by by credit growth.

54:03What Bitcoin Did Host:In Australia, it's even worse for two reasons. We have for the first time, and I don't want to turn this political at all because I don't like other side of politics. But for the first time in 30 years, immigration is now a huge political issue in Australia. And people are unhappy with the level of immigration. I think this is the Western world. Like it's not just Australia. Agreed. So for that reason, I feel like immigration, there's going to be downward pressure on immigration, which means downward pressure on property prices. And at the same time, and this is a really big thing, the local changes that the Australian government, federal Australian government has introduced with respect to negative gearing on property, has meant that investors can now borrow 30 % less than they were previously approved for.

54:50What Bitcoin Did Host:So with the stroke of a pen, Jim Chalmers has changed the borrowing capacity. If you could borrow a million dollars before the budget, you can now borrow somewhere between$650 ,000 to$800 ,000 now. Now, what does that do for property prices? By default, given that 40 % of the Australian market is made up of investors, now 40 % of the Australian market has 30 % less to borrow. So, that is going to put huge downward pressure on these property prices. And this is where, if you draw a comparison to New Zealand, they had some similar policies that were detrimental to the property market introduced in 2022.

55:25What Bitcoin Did Host:And the New Zealand property market is probably off somewhere between 20 to 30%, depending on which locale you want to look at. It's been devastating for the New Zealand property market. It's been difficult for the Canadian property market. The UK property market's been not so good either. And the Australian property market, I think, is back at 2022 relative to the New Zealand property market. So I think for the next two or three years, we're going to have downward pressure on the Australian property market, which is great because I think your purchase is probably going to coincide with the bottom of that property market and a ripping price in Bitcoin.

55:59What Bitcoin Did Host:So you might have timed it perfectly.

56:01Peter Dunworth:That's pure luck. But the crazy thing is in Australia that the housing market is like the stock market here. People aren't really investing in the stock market. If they are, they're investing in the US stock market generally. No one invests in the ASX. And housing is everything. So if the housing bubble does actually pop here, I think it'll be really damaging to a lot of people.

56:21What Bitcoin Did Host:I think it'll be just as devastating as it has been to New Zealand. And this is where what's worse than that is probably 60 % of the Australian stock market is made up or related to the Australian property market. If you look at the major banks, they're basically a leverage bet on the Australian property market. And the major banks make up about 40 % of the all ordinaries, which is the local stock market. Then you've got the property rates, you've got the building companies and everything else that's tied to it, you're at 60 % of the Australian index is tied to property prices in Australia. And this is the thing that's really hard as someone who is looking at this market.

56:59What Bitcoin Did Host:I would never bet against the Australian property market because everyone is in on it. If you look at locally, if you look at personally, if you look at families, you look at your friends, they're all in on property. And then you look at local, state and federal government. Guess what? Local governments generate council rates and everything else, which is typically derived from property values. State governments earn a fortune from stamp duties that get charged, and federal government makes a fortune from capital gains tax, which is one of their major line items in their budget as far as revenue goes, and that's largely driven by property sales.

57:34What Bitcoin Did Host:And then you look at the corporations. The major banks are in on it, and 60 % of the Australian stock market. So it's very difficult to unwind that reliance on property. And sadly, I look at the future for the next two or three years and with the policies that are instituted, I think we're going to be down 20 or 30 % relative to where we are today.

57:52Peter Dunworth:Yeah. And it's like everyone here will look at a house as an investment. I'm looking at a house as a place that I want to live and have my family grow up in. It's a very different thing. I'm not looking at it to necessarily make money. If it does, great. But I know I'm preaching to the choir here saying this to you, but I don't understand why you don't own anything but Bitcoin. And that sounds crazy when you see it's down like 60 % from its all time high or whatever it is. But still, when you actually weigh everything up, why would you own anything else?

58:17What Bitcoin Did Host:I couldn't agree more. And this is where property is an indoctrination. And particularly where we've grown up, where you've grown up, property was a way to get ahead. You look around, you look at the BRW's top 200 rich list. It's a little bit more diversified now with some tech founders and the rest of it, but that list used to be made up predominantly of property investors. And it's been a phenomenal way to grow wealth. I just don't know if it's going to be that moving forward with where we are from a digital perspective. I think we're moving into a more digitized world. AI is obviously going to prove that out.

58:54What Bitcoin Did Host:That's going to be really good for Bitcoin. And where I think a lot of property investors don't really want to face the music on this is across the Western world, most of the property charts that we see start in 1950 and they do nothing but go up. But people forget that property topped in 1930, dropped 50 % for the next decade, and then took 10 years to recover back to the 1930s price. Now, this is very convenient to leave out. Property doesn't always go up. And this is where the problem is, I think, A lot of people are going to find out what negative equity is and how damaging that's going to be, particularly with the loan-to-value ratios which banks are giving out now.

59:38What Bitcoin Did Host:You buy a million-dollar property and you can borrow 95 % on that. Now, if property prices drop 20%, you've put in$50 ,000 and you sell the house for$800 ,000. The bank's taking a$150 ,000 loss and you've ripped up your$50 ,000 and you're left with a bill from the bank for$150 ,000. So this is going to grind property to a hold as far as transactions and trading go. No one's going to sell the property. And to give, I don't often do this, but to give the federal government some kudos back in the GFC, one of the things that they instituted to support the local banks, they gave them unlimited support to help them through that period.

1:00:17But it was on the condition that a contract for a residential mortgage in Australia was

1:00:24What Bitcoin Did Host:good for the term of the loan. There was no re-rating it. There was no re-valuing the property. As long as the borrower was paying the principal and interest payments on it, there was no recourse that the lender could take to sell the property on them. And I think there's going to be a lot of people who are going to have to hold that property for the next 30 years just to break even. So that's dire. That's terrible.

1:00:50Peter Dunworth:Yeah, it's scary, man. There's not many good things you can point to in the economy and be like, this thing looks great.

1:00:59What Bitcoin Did Host:Yeah, outside of Bitcoin, that's why I'm so bullish on it. You look around and when you understand what the risks involved are with everything else out there, all of a sudden, the volatility of Bitcoin, you realize that volatility is not a risk. Risk is risk. Volatility is something completely different altogether. And when you weigh up the risks of all the other investment opportunities out there v Bitcoin. To me, Bitcoin is a clear winner, head and shoulders above everything else.

1:01:26Peter Dunworth:Absolutely. So for anyone who's made it this far, who might be panicking about the Bitcoin price action, what's your sort of parting piece of advice for anyone?

1:01:35What Bitcoin Did Host:This too shall pass. I think it's just a matter of bunkering down, making sure there's little to no leverage on what you have. Make sure you own what you think you own via self-custody. I think in these types of markets, you want to make sure that you're self-custodying your Bitcoin. You want to leave as little Bitcoin on exchange as you have to, because you're not sure what those exchanges are going to do. Are they going to make it through? Are they going to blow up? I don't know. Will we have another FTX? I'm not sure. But when you self-custody your Bitcoin, it is a superpower for peace of mind when you know how to do it.

1:02:08What Bitcoin Did Host:And I look at that and think, self-custody your Bitcoin, know what you own, make sure you've got what you own, and just be patient because I think this period in time will pass. We'll be sitting high, we'll be thinking we're smart again before we know it. And it's really good to remember these times and basically plan for them in the future because I've got no doubt they'll return as well.

1:02:31Peter Dunworth:One thing you said there that's actually interesting just to pull on before we close out is you said there may be another FTX, I don't know. It doesn't, at least right now, look likely. I can't point to any company in the space that looks like they're on the edge of blowing up. and i think that would be the first time we've really had that since i've been involved in bitcoin like every time there's been a big bear market there was like exchange getting hacked people doing rug pulls then there was ftx and the entire fraud around that with 3ac like if we got through this bear market without a major company blowing up i think that would be very very cool and like it just shows the maturing in the space i know right like who would have thought basically

1:03:08What Bitcoin Did Host:bitcoin's all grown up and the players in it so that's a really good point i hadn't thought of that. Every other bear market's been accompanied with absolute mass destruction, total loss. If we get through this time, I think that's wildly positive. And contrary to what people thought before major institutions started getting involved in Bitcoin, everyone thought that would blow up. But it turns out maybe they're a lot more responsible than we gave them credit for.

1:03:34Peter Dunworth:Yeah, I think that would be a very positive sign. Last time we recorded, Peter, it was, I think, when I released the show was four days before the final high in Bitcoin. So I'm hoping we mark the top there and I'm hoping we're marking the bottom here. So four more days of paying myself only. I always love speaking to you, man. I know I say this every time, but next time we need to do it in person. We need to meet up in Sydney or something and do another one. But I appreciate you coming on.

1:04:02What Bitcoin Did Host:Look forward to it. I always love catching up with you, Danny. And I'm eternally grateful for all your hard work in having the guests on that you do. I'm an avid listener and love your work. And thanks for distributing that message and educating all of us. So thank you.

1:04:16Peter Dunworth:Thank you, man. I appreciate it. I'll speak to you soon. Cheers, mate.