The Final Stage Of The Bitcoin Bear Market | Joe Consorti

25:53So this inflation is beginning to weigh on the consumer despite the economy seemingly from the outside looking in doing okay. And the moment we reach a tipping point where because of these delinquencies, the consumer cannot afford to borrow their way into living anymore, then that's the point at which you get a recession. That's the point at which spending does collapse and you do have rate cuts back on the table, along with money printed and potentially stimulus checks. So I tend to take the total opposite side of the argument where people are calling for rate hikes. I think there's actually a world where you get tons of rate cuts and stimulus checks this year in advance of midterms if we get an inflationary recession.

26:28But all of this boils down. All of this comes back to the K-shaped economy, right? This notion that as a result of money printing, as a result of massive inflationary pressures, and GlobalM2, the global money supply, actually is expanding at its fastest rate since 2021 right now. Fun fact, that's really cool. For the asset owners, right? So the asset owners benefit massively as a result of inflation. It's why the Federal Reserve exists to enrich those who own assets and to control the money to control you, whereas those who don't own assets don't benefit, right? Think about it this way. For those who might not be familiar with this, imagine that there is one pen in the entire world, and I'm the owner of that pen, and there are 50 other people.

27:06I own the pen. Nobody else owns the pen. This pen is worth$1, right? Everybody else has$10 in their checking accounts, whatever. So you have 50 people with$10 in their checking accounts. I'm the only asset owner in this economy. I've got one pen. It's worth$1. All of a sudden, if I decide to inflate the money supply by 1 ,000%, let's say, my pen suddenly is worth$100. So my pen is worth$100 or something like that. And everybody else's money in their checking account is still the same dollar amount, but it's not worth as much. So I have more wealth than they do because they didn't have assets that were denominated in the thing that I just printed a ton of.

27:48So that's how money works. and that's why it's so important to own assets and that's why you see this massive bifurcation in the economy where it seems like some people are doing absolutely exceptionally you have headline data that's coming in really strong but then under the surface cracks are forming consumer sentiment is the worst that it's ever been it's a money problem so in turn in that scenario um rate cuts money printing before the end of this year before maybe even midterms how much like what percentage likelihood would you put on that i would say uh as of right now because the straight is open, I would say no more than 20%.

28:21Before the strait was open, it was like ticking up day by day. So I was close to 50 % likelihood that that was occurring. But ultimately, cooler heads prevailed. I hope cooler heads prevail with the war itself. Hopefully, God willing, I don't want any more people to die. But I don't think it's going to happen. I think we reached a sort of a happy middle ground where we're still fighting this war, but the strait is open, so the economy will do fine. But unfortunately, we're also going to deficit spend a crap ton of money to fund this war. So yeah, I'd say relatively low likelihood now that we get that recession.

28:53But in my mind, because the strait is open, high likelihood that we sort of get that middle ground scenario where inflation doesn't do too terribly because now oil is beginning to flow through the strait of four moves again. Crude oil prices have dropped down to their pre-war levels, which is fantastic. you are going to see the next couple inflation prints tick higher as a result of the lagged impact of this oil shock over the next couple of months. But by the end of the year, price inflation is going to be right back down where it normally is or within a percentage point or two. Okay. So that's like the macro outlook.

29:27I want to bring it back a little bit to Bitcoin because you obviously saying you think the bottom will be sometime around October, not too much lower, maybe sort of low 50s, high 40s. What are the key metrics you're looking at there? Like what's giving you that indication? For sure. So there are a number of them. Three big ones that I really, really like. The first one being the 200 week moving average, which unfortunately we just broke through, which was in the low 60s, high 50s. That is a massive indicator because typically speaking, the bottom for Bitcoin bear markets is right around the 200 week moving average, excluding 2022, where, as I mentioned at the top of the hour, we had a lot of exogenous shocks that cause Bitcoin to fall much lower than it probably otherwise would have, Bitcoin tends to bottom right around the 200-week moving average.

30:11So what I mean to say by highlighting that before I talk about the downside levels is that chances are, excluding a massive exogenous shock native to Bitcoin, we are already within the realm of the bottom. Now, that brings up the next logical question, like what are the downside levels to watch for? Well, the first one that I really, really like, and this is sort of in my mind, bottom of the barrel basement price, would be the long-term holder cost basis. So this is the level at which the average price at which those on the network who have held Bitcoin for more than 155 days purchase their Bitcoin.

30:46Technically, it's the price at which they last moved their Bitcoin. But for all intents and purposes, nobody usually, apart from Bitcoin maximalists like myself and you and everyone watching the show, they typically only move Bitcoin when they sell it, right? So it's a pretty good indicator of Bitcoin's cost basis for this cohort of people who very rarely sell. Currently, that level is at$49 ,500. So if Bitcoin were to drift extremely low, like that would be the bottom of the barrel price for Bitcoin to go. The other level is actually just the normal network-wide cost basis, otherwise known as the realized price.

31:21This doesn't delineate between long-term holders and short-term holders. This is just the average price at which all of the coins on the network were last moved. This doesn't factor in coins that haven't moved in decades. And so it ultimately does drag the price down a little bit. But that said, it still tends to be a relatively accurate reflection of Bitcoin floors or like a fair Bitcoin value for the market. And that is currently at$53 ,000. So if you take those two in confluence with one another, then that sort of points to the low 50s, high 40s as being the bottoming range. why do I think we probably won't even visit the 40s?

31:58So this is something that might age terribly depending on how the next couple of weeks go in markets. Bitcoin has never bottomed without touching the long-term holder cost basis. However, the long-term holder cost basis obviously rises over time. Right now, you have to imagine people who've been holding Bitcoin for over half a year, chances are they're like, wow, this is well below my cost basis. I'm gonna average down. These are bottom of the barrel prices. We just closed below the 200-week moving average. We just closed below the power law floor for the first time ever. We might not have. I didn't check that, but I think we're close.

32:30Anyone in the show, please don't come after me. This is a cheap level for Bitcoin. I'm going to stack that. And then guess what? It raises the overall long-term holder cost basis. And so the floor will ultimately, in my mind, actually come out of the high 40s into the 50s, maybe even 51 or 52K. Reason number two being the fact that the structure of Bitcoin's market today is fundamentally different than it ever has been in prior cycles. I think I had mentioned this on the last show as sort of the reason why I don't think Bitcoin is going to go into the 30s or something crazy like that. And that's because the ETFs, right?

33:05We harp on this all day long, but the ETFs are ultimately so diamond handed relative to normal Bitcoin holders, it's not even funny. They're over two times as likely to hold their Bitcoin during a massive drawdown, according to the data, than normal Bitcoin holders. So all of the boomers that we like to make fun of, who've been denigrating Bitcoin for years and only just started buying, they're more diamond-handed than many of you guys watching the show, unless we have boomers who own the ETFs, in which case, good on you. But the reality is - Is that still the case? Because I know there have been outflows, like quite significant outflows over the last few weeks.

33:36Yes. So now we've seen outflows tick up. I don't know if I have the data in front of me. I'll try to pull it up while I'm yapping. Here it is. Okay. Eighth straight outflow,$231 million. dollars. June has seen a total of$4.3 billion leave the Bitcoin ETFs, the largest monthly outflow this year. So yeah, we're starting to see massive outflows. However, it is still the case. And also they did hold extremely tough all the way until Bitcoin was about high 60s, right? Mid to high 60s, that's when they started selling earnestly. But if you take it just from the top of the market to where we are now, the data still tracks, I believe, I'll have to rerun the numbers, that the ETF holders are about two times as likely to hold their Bitcoin during a massive drawdown than the normal spot Bitcoin holders.

34:24And thinking logically, it sort of makes sense, right? Think about it this way. If you are a retiree who is allocating passively every two weeks to one of the Bitcoin ETFs, right? Or an index fund that holds some of the Bitcoin ETFs or tracks whatever your work allows you to do. Are you going to be trading in and out of those things actively? Probably not, right? Some people do use IRAs and 401ks in order to trade in and out of for tax advantages, but we're talking about like half a percent of the market, right? The lion share of the market that is using retirement accounts and buying the ETFs are just buying every two weeks and then not doing anything with it.

35:03So there is some selling that comes from that cohort, of course, like we literally are seeing it right now. However, for the most part, it's kind of a corner of the market that just holds tough and doesn't do much of anything, which is really cool. Like that's what you want for Bitcoin to mature as an asset from a price perspective, having lower volatility. And so that's one of the reasons, one of the chief reasons, other than the fact that the floor is so close, the historical floor being the long-term holder cost basis is so close compared to where we are now, but also the fact that like the makeup of the market, if you will, is just so mature relative to what it has been previously that I don't think you're going to see like a 70 % drawdown this time around.

35:43I think we probably max out around 65%. We see a bottom around like 45K to 50K and that's that. People, again, will say as they did in 2022, Bitcoin's going much lower, Bitcoin's going much lower, Bitcoin's going much low, and then it won't. So that's what I'm happy, comfortable planting my flag in. I'm happy to lose a little bit of credibility if I'm wrong, but that's how I think the cycle plays out. The interesting thing about that number as well around the 50k mark is that in the 2021-22 bull market, it was all about trying to figure out if Bitcoin can sustain being a trillion dollar market.

36:15And it obviously was battling against that level for a long time, went way above it up to a$2 trillion market. But this is it testing a trillion dollars again. Is there something important about that or is that just sort of a coincidence um yeah it's it's part coincidence but i'll actually steel man the case for it being important i think bitcoin being in the top 20 largest assets in the world is something that is only going to improve its credibility over time why do i say that well i'm sure we've all seen the clip at this point of that billionaire something paul grantham something grantham screaming about bitcoin to joe kiernan on cnbc who's our boy we love that guy Hopefully he can come on the show.

36:54That'd be an excellent episode. Who was defending Bitcoin. He was saying, Bitcoin's worthless. It's worth no more than a chain letter, yada, yada, yada. All the stuff you've seen before. All the stuff you were hearing about Bitcoin when it was$1 ,000, right? Lo and behold, here we are. For every Bitcoin denier who acts like that, there are hundreds of Bitcoin skeptics who don't think like that, right? Right. They've simply been told or seen or heard or believed that Bitcoin is largely worthless through the grapevine. They don't it's it's it's a strong opinion they may have, but it's loosely held.

37:26Right. Versus the Paul Granthams of the world, the Warren Buffett. I think that's his name, by the way, Paul. I don't anyone correct me in the comments. Versus all of those guys who have strong opinions, strongly held. They are so confident that Bitcoin is absolutely worthless for every one of those guys. You have hundreds of people who just think Bitcoin isn't worth much. But the more often that Bitcoin is in that top 20 largest assets in the world category, the more often that Bitcoin outperforms all of the other crypto in the market, the more often that Bitcoin outperforms everything else during these major bull market rallies, which I believe we're about to enter into, Bitcoin's about to enter into its next bull market at some point later this year, early next year, then the more of those people get converted.

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41:04That's blockwaresolutions.com forward slash WBD. Okay, can we get into the elephant in the room? So like who are the buyers, who are the sellers right now? And obviously all the pressure has been on Saylor over the last few weeks. All kind of started when he sold his 32 Bitcoin. Bitcoin price tanked and the narrative started building around the sort of sustainability of stretch and micro strategy. Do you want to kind of fill us in as to everything that's happened since then? Yeah, so it's wild. So I actually went on a debate last Saturday. We filmed it and I spoke to one of the most outspoken bears against strategy, Vinnie Lingham, and his argument boiled down to this against strategy.

41:48His argument boiled down to, I don't like Saylor because he's a narcissist, and I think he's going to be terrible for Bitcoin because he's going to be forced to sell Bitcoin even though he doesn't have a lot of leverage on his balance sheet. That's what his argument boiled down to. And that's what the bear argument, I'm not even being facetious here, like rude. I have tried to steel man their bear case so, so much. And I literally sat in front of this guy and talked to him about it. And that's what his argument boiled down to. But to step back for people who might not be aware, for people who've been in a coma or off Bitcoin Twitter for the last month, Saylor sold 32 Bitcoin.

42:19Now, this isn't the first time he sold Bitcoin. He sold a few hundred Bitcoin back at the bottom of the bear market during 2022, but it didn't get as many headlines back then. Actually, it did, but because they're a much larger company now, and Michael Saylor is obviously much more famous of an individual, it got more press this time around. Selling 32 Bitcoin or selling Bitcoin in general is something that strategy, Saylor, Fong Lee, they've all spoken about at length numerous times for the last several months leading up to actually selling that 32 Bitcoin. So they've been forecasting they intend to sell.

42:51Why did they wind up selling if they can still raise money in capital markets? Well, it's for a very simple reason. And that reason is it's one of the three reasons that the S &P Global Committee that not only gives them their credit rating, but determines whether or not they're included in the S &P 500 gave them as to why they're not included in the S &P 500. The other two reasons were an over-reliance on capital markets and too much reliance on convertible debt. And also not reliance on capital markets, but not a large dollar reserve. So what were the three moves that strategy made over the next few weeks once S &P Global said, hey, we're not going to rate you properly and we're not going to include you in S &P 500 because of these three reasons?

43:31Well, they addressed all of them. First, they built the US dollar reserve. Then they retired several billion dollars worth of their convertible debt. Now they only have$6.7 billion worth. All of it is near 0%. The first of it is due at the very end of next year, I believe, actually 2028. So 27 months from now. And then the third thing they did is they sold their Bitcoin. They literally said, you know, we're not going to include you in the S &P 500, but multi, multi, multi trillion, 30, 40, 50, 60 trillion dollar market passive inflows up the wazoo because you are reluctant to sell Bitcoin in order to fund a dividend.

44:06So strategy said, OK, we're going to sell Bitcoin to fund a dividend just to prove that we can. They did. The market went insane. I don't believe the seller and Bitcoin sold off massively. I believe those two events are disconnected. But at least now you know why sailors sold 32 Bitcoin in case you might be unaware. A lot of people, the bear case has been, well, they're selling because they're forced to sell. Like so many people, and this boils my blood. And I've said outwardly on every show that I've talked about this, I don't have a material position in micro strategy or strategy, right? Functionally, it's under$1 ,000, like less than 0.5 % of my portfolio.

44:41I don't own any stretch. Why am I being so outspoken about this company being fine and them not being a systemic risk to Bitcoin? Well, because I just, it boils my blood when I see people just lying through their teeth. Like words actually have meaning. What do I mean by that? Well, a lot of the people who've been bear posting about strategy and sailor have been using the word death spiral. Peter Schiff coined it. He did a podcast about a month ago saying that strategy is about to enter into a death spiral. I love James Lavish, great friend of the show, both you and I, Danny. Good on him for not coining death spiral, but bringing it into the mainstream lexicon as far as this corner of the internet is concerned, but so many people are misusing it.

45:23A death spiral means you have way too much debt on one side of your balance sheet in order to service it. So to service it, you issue even more debt. The rate on that debt goes up because your creditworthiness declines and so you need to issue more debt for that and it's a never-ending spiral of increasing debt issuance because of the ever higher interest rate that you have to pay on it and no other way of funding your obligations. Strategy definitionally cannot be in a death spiral. Number one, because the remaining convertible debt they have not only isn't due until 2028, but is also only 11 % of their balance sheet and has a 0 % interest rate.

45:56So in order for strategy to be in a position where they were forced to sell Bitcoin, several things would have to happen at once. I promise I'll get to what's happening now with strategy, but several things would have to happen at once. Number one, Bitcoin would have to crash by about 89 % and stay there for the next two and a half years or the next 27 months. So that way, the debt on their balance sheet matched their obligations, matched their assets, the Bitcoin they hold perfectly, one-to-one. Then they would also need to not sell a single dollar from their US dollar reserve, which now has 17 months worth of dividend coverage in it, right, as of yesterday.

46:33And then on top of that, they would need to not be able to tap the capital markets for one single dollar, despite proving the fact that they've been able to tap the capital markets for over$60 billion over the last four years. Oh, and to top all of that off, they would not only is their convertible debt not due until 2028, 27 months from now, but it's due in five separate tranches or six separate tranches over the next four years after that. So Bitcoin would have to crash by nine, 89 % and stay there. And strategy would have to not sell a single dollar from its US dollar reserve. And they would not be able to attack capital markets at all.

47:09So like when you put it that way, it sounds really ridiculous. all of the strategy. So the last thing I'll say here, and then I'll get to the latest updates, is that a lot of people think that the preferred equities, such as STRC, are dead. They're not, right? And obviously, Saylor isn't going to suspend the dividend. He's not going to cut the dividend to 4%, 3%, something more manageable for him. He's even raising it, right? Which is good, right? Because when fixed income instruments sell off, it's literally just the market telling they want a higher yield. So that's what Saylor is giving them.

47:43This is the opposite of a debt spiral. But anyway, because the preferred equities are not debt, they're not an obligation. So they will never be forced to sell Bitcoin to fund them. In a worst case scenario, and I'm not saying this would happen, Saylor could suspend the dividend, right? He's not going to do that. He doesn't need to do that because it just laid out the case for why strategy would never need to do that based on their current capital structure. 11 % leverage ratio,$50 billion worth of Bitcoin on their balance sheet, 18 months worth of cash dividend coverage. And the other thing, I promise I'll wrap all this up in a bow, is STRC, this is the major thing I'm sure we'll chat more about it, is a lot of people have been likening STRC to Terra Luna.

48:27For those who are unaware, Terra Luna was an algorithmic stablecoin that was around during the bear market of 2022. It collapsed during the summer of 2022. An algorithmic stablecoin essentially means on one side, you have the stablecoin. On another side, you have a crypto token that can be minted out of thin air in order to minted or burned out of thin air in order to make sure that the price of the stablecoin stayed around$1. Well, a lot of people were levering up on one side in order to arb the difference between the price differential and$1. Once the price began moving very much against that asset, people got liquidated.

49:06They were forced to sell. The amount of this crypto token that needed to be minted into existence rose quite a lot, and that drove more for selling, so on and so forth. And so effectively, you had this useless crypto token inflated into infinity, and this algorithmic stablecoin, which was supposed to be pegged around$1, completely collapsed as a result. STRC is nothing like that. For one, it is a nasdaq listed instrument okay granted there's some junk listed on the nasdaq i won't lie but strategy is a balance sheet that is uh 50 billion dollars like 28 years of runway from a bitcoin perspective for all of their dividends um and that's if bitcoin doesn't move at all um not only that but it's not an algorithmic stable coin it's not a stable coin it has no peg that's one of the other things that a lot of people have been saying they said oh strc has de-pegged from$100.

49:55Well, here's the deal. It's supposed to float around$100. That's the truth, and that's why they're raising the yield in order to make it so that it drifts higher, closer to that$100 mark. But there's no peg. It's not pegged to$100. A lot of the death spiral folks, the financially illiterate people who need to buy Finance for Dummies, you can literally pirate it for free to search Finance for Dummies PDF online, have been saying that STRC de-pegged strategies entering into a death spiral, all this stuff. It couldn't be further from the truth. Sorry if that was a bit of an off-the-rails defense of strategy and what's happened, but that's why they sold 32 Bitcoin.

50:32That's what's happening with STRC and strategy. STRC falling from where it was poses no risk to strategy. It poses no risk to Bitcoin. Everything's fine. We're just close to the bottom of a bear market and people are searching for a villain, and Michael Saylor tends to be a convenient one. I disagree with some of the stuff you said, though. Like, I think you said everything when you said everything's fine. I don't think this shows that everything's fine. Like, I think the market is clearly saying, like you said earlier, the yield that they're offering is just nowhere near high enough. And like, I think, again, I agree.

51:03It's obviously$100 is not a peg, but it kind of gets into semantics. Like that is the par value of this preferred. It's where Saylor wants it to be trading and it's currently trading at like$84. Like that shows that our value is one cent, but I do agree in the prospectus. But I do agree with you that, yes, it should be trading around 100. Do we need to get into that or is that not important? No, no, it's not important. Okay. Okay. But so it does show that something's not quite right here. And I don't know exactly what that is. I think maybe it's when there was kind of a race to see who could offer the dividend payments the most regularly.

51:39Everyone kind of sided with SATA because it was doing daily dividend payments and then like stretch broke down. Like, why do you think this happened? Is it just over leverage or is there something deeper? Right. So I think, I mean, you started to see STRC trade down a lot once Saylor sold that 32 Bitcoin. I don't think him selling 32 Bitcoin is what caused that massive Bitcoin sell off when he announced the sale at like 68K all the way down to like 62K. I think that that was more geopolitical stuff happening. We were approaching a deal, then we bombed them again, then we were approaching another deal, then we bombed them again, combined with a leverage flush.

52:12I do think there was some selling at the margin. But regardless, what sailors selling 32 Bitcoin did do is it drove STRC to sell off massively. You pair that with all of the sensationalist headlines, it sells off even more. But I think the broader reason that it sold off is quite simple. I think people are just demanding a higher yield for this instrument. Now, the reason behind that, we can speculate. There are a couple of reasons. I think the most probable, obviously, there was some mania around the selling, right? People selling because they were panicked. But largely, over a long enough time horizon, markets are efficient.

52:44They might not be right, but they're somewhat efficient, right? Market inefficiencies are how we make money. If everybody knew about the Fed printing a ton of money, Bitcoin would be, you know, a billion dollars a coin, but it's not. And that's the opportunity. Similarly, with SCRC, I think the market was just saying they wanted a higher yield. In my mind, that's because Bitcoin is closer to its bottom and its forward returns over the next six months, 12 months, two years, five years are going to be higher on a year over year basis as a result of it being closer to the bottom than not. So just to illustrate an example, Bitcoin's compound annual growth rate from$70 ,000 a couple of months ago all the way up to a potential cycle high of$40 ,000 or$400 ,000 would be something like 31%, 32%, right?

53:29But from a cycle low of$58 ,000 where we are now, that's a forward compound annual growth rate of like 41%, 42%, 45%. And so naturally, if strategy's business model is buying Bitcoin, buying this asset with a high CAGR on one side, issuing preferred equities and paying a yield on the other side, and then capturing the difference, basically, in my mind, this is simply investors, apart from the panic selling of which there was a lot, it's simply investors writ large saying, hey, we project the forward returns of this thing to be larger. So we want to be compensated more fairly and get more of the return, if that makes sense.

54:05In my mind, that's obviously what it was, but who knows. Yeah, no, that does make sense. I do think the other thing that played into this, though, is when they retired the converts with the cash that was like from everything that I had seen, it seemed like that cash was being saved to pay dividend payments in the future. And so when they used a lot of that cash to retire preferreds, like I think the market was probably a bit shaken by that. I understand the idea of why he did that. He wants to be included in the S &P index, but it seemed like a misstep to me. I don't know if you agree with that.

54:38I tend to agree. I think it definitely, here's my thinking. It's tough to get into the head of a guy like Michael Saylor. But like, here's my thinking. All of their guidance, right? They're the Bitcoin central bank. They offer forward guidance, just like the Fed. Kidding, of course. Bitcoin has to know a central issuer. But for all intents and purposes, he was telling the market, hey, look, we're going to raise this US dollar reserve so that way we could pay down dividends. He even had that like spaceship graphic that a lot of people were saying, look, it's a pyramid scheme. Anyway, that was the intention of the US dollar reserve.

55:06But then like three or four weeks later, the S &P Global Committee comes out and says, yeah, we're not going to include you in the S &P 500. And you get a B minus credit rating despite being over collateralized because you have an over-alliance on convertible debt. And so, Saylor immediately went, no, we want to get in the S &P 500, retire it right now. And so, the dollar reserve that was set aside for dividend payments, he decided to grab it, sell off more than half of it, and use it to pay down those or buy back those converts rather. So from a guidance perspective, because he did something the market wasn't expecting, I definitely think that – I don't know if it was necessarily the wrong move.

55:44But what I'll say is that from a long-term capital structure perspective, I think it was good, particularly because those had like 6.5 % interest rates compared to the zeros that they left on. But I think from a timing perspective and a communication perspective, it totally spooked the market. And I definitely think that it led to some of the sell-off. And it's also, I think, one of the chief reasons that they decided to recapitalize the U.S. dollar reserve up to about a year and a half worth of dividend coverage. So I think they recognize they made a mistake and tried to amend it. Yeah. So that's the thing they came out with a day or two ago, which is they're increasing the U.S.

56:18dollar reserve. Is it 17 months of runway they've got at the moment in terms of paying the dividends? They've got a Bitcoin monetization scheme. Like, basically, they're going to start selling Bitcoin, which I actually think is a good thing. Like, I think they should if they need if they need to sell Bitcoin to get money to pay the monthly dividends or biweekly dividends or whatever, like they should do that. Like, why do you think that's been looked at so unfavorably by the market? Yeah. So I think that and I said this a couple of weeks ago. I love this topic so much because it shows who is like a sensationalist and who is a little bit more rational.

56:54Even folks like Andy Constant on X. The biggest strategy detractors out there have been saying, I don't get what all the fuss is about for sailors selling Bitcoin. Why are people – anyway, it shows who is being a sensationalist and trying to get views just for the sake of that versus who is looking at this rationally. The market was spooked, and I said this several weeks ago. The market was hugely spooked by sailors selling 32 BTC. They weren't expecting it. It came suddenly, even though he forecasted it, but it came suddenly, the first time he has done it in three and a half years. But then Saylor went and said, you know what?

57:28We're going to establish a Bitcoin monetization framework to just formalize this thing that we've been discussing. And we're going to make it so that we're authorizing ourselves to sell up to$1.25 billion to cover dividend interest. Whoa, that's a lot more than the like 10 million something from the 32 Bitcoin that he just sold. The market didn't move an inch. In fact, strategy went up. SGRC went up and Bitcoin went up yesterday. It's down now for other reasons, but Bitcoin went up, right? So clearly the market really likes the idea of selling Bitcoin. The 32 Bitcoin sale was ripping the bandaid off and priming the market for what's to come.

58:03What's to come isn't forced selling, right? I already went through why strategy will never be forced to sell Bitcoin. Well, not never, but the likelihood that they'll ever be forced to sell Bitcoin is extremely low. more like systematic selling, right? And this is sort of the end game, the end state of the machine I just described a moment ago and why I believe strategy will always be a net buyer of Bitcoin. Effectively, and this is kind of the strategy thesis that we've been talking about ever since they launched the preferreds. At first, when there were no Bitcoin ETFs, strategy was sort of the de facto Bitcoin ETF.

58:35Hey, we're a public company. We have a relatively small software business, but most of what we do is buy Bitcoin. If you want Bitcoin exposure with a little bit of leverage, buy us. And then the ETFs came out. No reason to own strategy anymore. And so strategy was effectively bringing Bitcoin to the$115 trillion equity market, right? Now they launched the preferreds, right? They began launching the preferreds two summers ago. And here we are, June 2026, tapping into a much larger market, the$300 trillion plus global fixed income market, and even a little bit of the real estate market. Investors who either have mandates to not be able to buy Bitcoin, get direct Bitcoin exposure, and also people who might have a slightly lower risk profile and want Bitcoin exposure and a little bit of that upside, but without needing to hold this high growth asset.

59:19Like fixed income is the largest market on earth for a reason. There's a huge demand for those things. And so strategy effectively, what they're doing with the preferreds by buying a ton of Bitcoin and then funding it by offering an asset that yields anywhere from 8 % to 12 % with STRC now after this latest dividend raise that's coming up, is they are tapping into a market that otherwise could not or would not purchase BTC. And they're using the demand from that market to fund Bitcoin purchases. Effectively, what you've got, and I just described this a moment ago, is a Bitcoin transmutation machine.

59:51On one side, you've got this high growth asset doing anywhere from$20 to$35 annually over multi-year timeframes. And then on the other side, you've got a funding mechanism, STRC and others, preferred stocks that are offering anywhere from 8 % to 12%. And the spread between the two is strategy's business model. They're using this demand to fund purchases of this thing. And then, and this is the part that they haven't been doing yet, and it's the reason people have called them a Ponzi scheme, sell enough of this thing to fund this thing. That's what they haven't done to this point. But this finally closes the loop, right?

1:00:25Because to this point, they have funded new Bitcoin purchases by issuing more STRC, but they've also funded STRC dividend payments by issuing more STRC and MSTR, their common stock. By selling the necessary amount of Bitcoin to fund STRC dividends, the Ponzi allegations go away completely. Because on this side, they have a productive asset that is funding the dividend. All of a sudden, you can't call them a Ponzi scheme anymore. And the only issue people can logically take with strategy is believing that Bitcoin cannot go up indefinitely or it cannot maintain that really high compound annual growth rate, right?

1:01:01The Ponzi allegations go away entirely. Strategy sort of enters into its final form where it is a net buyer of Bitcoin over time. It's buying a ton of Bitcoin using the demand for this instrument. This is doing 30%. This is doing 12%. They sell enough to fund the 12%. They keep the rest and the machine keeps running. It's much more sustainable in the long run in my mind. and it's very, the last thing I'll say here, it's very telling that the market did not sell off on the news that strategy intends to sell$1.25 billion of Bitcoin. It's very telling that the market did the opposite. It went higher, right?

1:01:32Because this is what the market wants. In the market's eyes, this is a much more sustainable business model. In my eyes, this is a much better business model and I'm very happy that they're taking this step. Yeah, I think it's a better business model. I think the market will panic as soon as they actually sell again. But like, I think as of right now, the total payments that they need to make is just under$2 billion a year. The Bitcoin market can sustain$2 billion being sold across a 12-month period. That's easy. That's nothing. I think it's a good idea too. I don't necessarily know why you would hold MSTR anymore.

1:02:07But I have a bias in this because I just like holding Bitcoin. But it seems like the Bitcoin is going to get sold down from the reserve. Obviously, they're going to be stacking as more and more people come into the preferred. But then anytime that there's an opportunity for them to go in and hit the ATM and dilute shareholders, they're going to do that. Like, it seems very clear. I think the idea of getting to like a 3XM nav is history. I don't see how that ever happens again. And I mean, we're nearly at the flippening. The stretch is$84 and MicroStrategy is$86. Like, that's the real flippening.

1:02:38I love it. The real flippening. Never happened with Ethereum, but it happened here. Yeah. Like, why do you think anyone would want to hold MSTR? Yeah, I mean, I think the bull case for MSDR is it's now less of a Bitcoin proxy and more of a true Bitcoin operating company. So Jack Mallers is getting what he wanted out of out of Sailor in that they are using Bitcoin's monetary properties and its growth to create a financial product that is tied to that. Right. So in the past, the reason you buy strategy is because they lever up Stackathon of Bitcoin. They outperform Bitcoin. Now, I believe there is a world where they can outperform Bitcoin.

1:03:12However, it's going to be not as a result of the leverage they have on their balance sheet, but as a result of the service they're providing, right? In the same way that you invest in Apple because the iPhone is a product that sells really well and you want exposure to that company, you buy strategy because all of these different fixed income products always sell very well, particularly SCRC, sells extremely well. They're offering a valuable service and you want exposure to the company, not because of the levered Bitcoin exposure, obviously that's nice, but because of the service they provide, right?

1:03:41And I think in that universe, too, Bitcoin holders are also quite happy because, and I agree with you here, Danny, a lot of people view MSTR as a Bitcoin alternative. It's not. I want to be abundantly clear to anyone listening. MSTR effectively, at that stage, fully steps into becoming a Bitcoin company. It's core to what they are. You're not buying MSTR as a result because you want levered Bitcoin exposure or as an alternative to your Bitcoin. It's something to buy in addition to your Bitcoin as a small portion of your stack. If you believe that this company is providing valuable service and you want exposure to that equity over time.

1:04:15I think that's how the story flips. And I think maybe that's what causes the strategy haters to finally flip. But we'll see. I think just like Peter Schiff hates Bitcoin completely irrationally, I think there will always be some people who hate on this company completely irrationally. But we'll see. Just a quick question for you. So the dividend rate went to 12%. It's currently trading at just over$84. dollars how high do you think it'll have to go to get back to the hundred dollar benchmark that's a good question looking right now at the effective yield um when strc is trading at 84 dollars it bottomed out i think in the mid 70s around 74 75 now it's back up to 84 on the dividend announcement for 12 percent up from 11 and a half percent the effective yield um is at 14.14 so those things are coming closer to each other.

1:05:08The effective yield and the dividend are coming closer to each other. What you want is for those to be as close as possible, meaning STRC is as close to 100 as possible. The effective yield was 15.5 % three days ago. And so after strategy established their monetization framework and they announced the dividend increase, clearly the market is not only more comfortable with the corporate risk associated with strategy, but they also think 12 % sounds much more reasonable. And so I think chances are maybe one more rate increase and you see the convergence of those two things, but it could be even higher.

1:05:39It could be 13%, which sounds insane. But number one, Strive is doing it. They're totally fine. They have a lot of trading volume. And number two, again, the forward returns of Bitcoin, ostensibly because we are very close to the cycle bottom, are much higher than they would be if we were in the middle of the bear market, right? So investors are demanding a higher percentage from that. And as a result, in my mind, that'll be fully sustainable going forward. Obviously, if and when they do increase the dividend to like 12.5%, 13%, you will see headlines saying, oh, they're getting desperate now, folks.

1:06:10They're about to blow up. It's just not the case. So I think long story short, probably one or two rate increases, but we'll have to see what happens. All right, Joe, this has been awesome. Parting advice for anyone who's panicking through their first Bitcoin bear market, what should people be doing right now? Well, first and foremost, welcome, and you're watching a great show for it. What Bitcoin did is the prime spot to be during a Bitcoin bear market. What I'll say is this, like ultimately, if you find yourself in a position where you need Bitcoin to go up before a certain date, or you cannot have Bitcoin fall to a certain level, otherwise you lose money, then I would say reconsider your strategy.

1:06:51Take off some of the leverage, just buy spot Bitcoin and hold it. Like it's really simple, guys. It's simple, but it's not easy, right? And for those of you who might be sitting in spot and still feeling the pain, I understand. I've been there too. Danny's been there too. Everybody watching this show has been there too. It's a difficult thing. But the fact of the matter is, regardless of what's happening right now, nothing has changed about the underlying Bitcoin thesis or its performance relative to the rest of the market. Bitcoin is still the best performing major macro asset over the last decade, even down 50%.

1:07:20It beats every other major macro asset that's within a mile of it, right? From a yearly percentage perspective, it's still the 15th or 16th largest asset in the world, storing$1.1 trillion worth of value or like, you know,$1 trillion worth of value. Over time, it has proven to be the best store of value, definitionally, in the market. And it just tends to do this. So the final thing I'll say is that obviously people telling you to zoom out, it gets old, right? Zoom out and understand where we are and why Bitcoin exists. You can see the white paper behind me. My camera isn't high enough resolution for people to zoom in.

1:07:55But the reason I have this behind me. In the Genesis block, the inscription from the article in the Genesis blocks, and Chancellor and bring for second bailout for banks, of second bailout for banks, that was in regards to the UK financial crisis happening around the same time as the US financial crisis, obviously, was global. And the reason that headline was chosen was very simple. And that's because the Fed cannot stop printing money. Global central banks cannot stop printing money out of thin air. And not just printing money, but printing money at an accelerating pace. That is why Bitcoin exists.

1:08:26It is an absolutely scarce monetary asset that has absorbed and will continue to absorb the excess liquidity, the excess money printing that global central banks just can't stop printing, right? So as long as that remains the case, as long as central banks keep printing money, Bitcoin's value prop remains unchanged and a 50 % drawdown isn't something that should scare you. It should be viewed as an opportunity and nothing more. I love it, man. Joe, what a way to end the show. Tell everyone where they can go and check out. Your YouTube channel's crushing. Where can they check out all the work that you're doing?

1:08:57Absolutely. Well, Danny, thanks so much for having me on. If this is a collaboration, you can just go down there, click my name, click subscribe, or before you do, watch some of the videos, or you can just search my name, Joe Consorti, up there in the search bar. If you're listening on audio, you can just go to Google, Google Joe Consorti. You can find me there. Awesome. Thank you, man. I will speak to you soon. We've got to do this again. That was really cool. Absolutely. Thanks, Danny. I appreciate it. Bye-bye.

1:09:31Thank you.