The Four Year Cycle Is Not Broken | Matthew Mezinskis

29:16I'll put the video on Spotify as well. You kind of need to see this one. The first 10, 15 minutes talking about the power curve, hopefully it was helpful. But yeah, it really does help to watch the video with this stuff. So now you can see in 2017, we hit it. All right. We still like hit the 100th percentile. Nice. We did not in 2021. But still, these curves are now closer. And back to the 2022. I'll just switch back so you can keep seeing. 2022, notice that the 10th, the 0th was way far away. the 10th percentile, which in this model would be 13, 14 ,000. We still didn't hit in 2022, but now we are hitting the zeroth in 2022 here.

30:02So we are getting, we are painting bottoms. Statistically, this is a much better chart. Okay. It's much better. And notice, by the way, notice how the multiples are different. I show the multiples here too. So this is now the multiple of price relative to the trend that you see. And as you see, it's declining. They decline. They all decline. They get smaller, which is a good thing. This is a helpful model. So this is only something you can do on a power curve. That's what I'm going to say. You can apply this method, but it's going to be different with an exponential curve. Okay. So with a power curve, doing a quantile regression this way is probably the best statistical way.

30:42Do you want to pay less in taxes and stack more Bitcoin? Of course you do. Well, by mining Bitcoin with Blockware, you can. Under section 168K of the US tax code, Bitcoin mining servers qualify for 100 % bonus depreciation. This means every dollar you spend on miners can directly offset your income in a single year. And that's true for both business owners and W2 earners. If you have$100 ,000 in ordinary income, you can purchase$100 ,000 of miners and potentially offset your tax liability entirely. Blockware's mining as a service does the heavy lifting. They secure the rigs, they source the low-cost power, and they handle all the day-to-day maintenance.

31:20You stack Bitcoin every single day while drastically shrinking your tax bill. Get started today at blockwarsolutions.com forward slash WBD. That's blockwarsolutions.com forward slash WBD. The thing that keeps me up at night is the idea of a critical error with my Bitcoin cold storage. And this is where AnchorWatch comes in. With AnchorWatch, your Bitcoin is insured with your own A-plus rated Lloyds of London insurance policy. and all Bitcoin is held in their time-locked multi-sig vaults. So you have the peace of mind knowing your Bitcoin is insured while not giving up custody. So whether you're worried about inheritance planning, wrench attacks, natural disasters, or just your own silly mistakes, you're protected by AnchorWatch.

31:58Rates for fully insured custody start as low as 0.55 % and are available for individual and commercial customers located in the US. Speak to AnchorWatch for a quote and for more details about your security options and coverage, visit anchorwatch.com today. That's anchorwatch.com. If you haven't tried out Club Orange yet, then now is the time. It's my go-to place to find Bitcoiners whenever I'm traveling. Club Orange is a social app built for Bitcoiners where you can find meetups and events in your area and find merchants that are accepting Bitcoin. There are over 19 ,000 Bitcoiners on there and whether you're at home or traveling, it's a great place to keep in touch with Bitcoiners from all over the world.

32:35I've been using Club Orange since it was Orange Pill app and it really is awesome. So if you're on there, drop me a DM and say hi. and if you want to find out more and download the app just search for club orange on your app store or go to club orange.org but the interesting thing there is like on the other one other chart you were pulling up the percentile multiple it looked like we were probably close to a bottom but there was still some room to go whereas on this chart it looks like we're hitting the absolute bottom right right exactly and so you have to kind of guess you have to think okay so hopefully we're not going to set some crazy low, but it looks pretty, you know, it still looks low, but we're not, we're not quite sure here.

33:17We're scraping the bottom. Now, again, to be clear, this is just statistics. Anything can happen, whatever. Um, but statistically right now, according to a quantile regression of Bitcoin's price relative to the power curve, we are basically at the bottom. I mean, 63 K as cheap as Bitcoin gas. Yeah. Relative to the power trend this is as cheap as it gets and that's the key message that's the key point like yeah could it drop another leg down yeah but that's not going to break the power curve it's just going to pull this zero with line you know it's just going to slant it's it's tilt a little bit and the nice thing about this analysis by the way danny as opposed to the other one is these lines move independently of each other right with this one my multiple percentile multiple it's it's it's It's all about the multiple at the end of the day.

34:05So the max multiple is what stays. And that's what keeps this thing parallel. It doesn't happen here. They move independent and we can sort of see, okay, what could be a more realistic thing? So in my opinion, yes, and again, always never financial advice, but this is relative to Bitcoin's, you know, 6 ,500 day history, whatever it is, we are at as cheap as you can get relative to the power curve relative to the Bitcoin trend itself. All right, that happened in 2022. It did not even happen in 2020.

34:44Although probably that was closer because this got pulled down further. This is also a thing, you can't show it how it evolved, but it was probably closer in 2020 during that scare. And then really you'd have to go back to like the most thin days of Bitcoin trading to put these sort of multiples in. So that's where we are. And I would say, you know, if you look at this chart, we're going to look at others. If you still want to tell me that the four-year cycle doesn't have some interesting impact here, I would say, you know, investigate your priors again. I mean, this is, we have hit these types of bottoms at every prior four-year cycle.

35:23What is different? Yes, we didn't have as high highs last year as we talked about. What's also different is we have screamed down towards the bottom. All right. So in the last cycles, as most people might remember, it took like a year, right? From 2017 to the year to bottom in December 2018. 2021, it took a year, November, December 2022. Now, we have done this in a matter of months. Yes, we didn't have a huge top and it was even a little bit earlier, October. But now here we are in February. and this is where I'd say I'm very proud of this analysis. It's something that really affirmed what I was saying.

35:59I couldn't tell you it was going to happen, but I was saying, you know, let's just hold off on this sort of prognosticating how Bitcoin's going to do something way different than it did in the past. I'll believe that if January, February, we're at like, you know, over a hundred thousand and look where we are. We're totally following prior cycles. Why do you think we're still trending quite far below that power law line, but we're not really going above it in the bull markets?

36:32Ah, okay. So I don't know the exact answer, but I can show you an interesting chart that would say we're actually not at the lowest. Okay. So this is a, this is a cool chart right here. What I'm showing you is, let's see, you can take the forecast off. So here's the old power curve. And this is that gray line that I showed you before. So at any given time, the power curve, it's not a beautiful, you know, the line that you can draw after all time data. But it's, you know, it does settle down. And it goes to your question. More of it, in fact, two thirds of the time, we're under this green line above it.

37:09That's just the nature of what the Bitcoin power law does. Okay? So it generally tends to pull it down. But what's cool is we're not at a low. Even right here, right now, we are not at a low. So to show that, you actually have to do an interesting analysis here. And again, this is where I can think. I used to do this like on a monthly basis by hand. It was more difficult. But now with the magic of AI, I can do a lot more quicker. but I could show you every day's forecast of what the power trend would predict today's price to be February, sorry, March 2nd, March 2nd, happy spring, March 2nd, 2026.

37:51All right, so what you see on this blue line was the prediction of the price based on the Bitcoin data at the time in March 2nd, 2026, all right? So you'll notice in the early years, like I said, when we're way sort of booming, you get some crazy prices. All right. You're not reading this wrong. $68 billion. Basically, you know, the June 2011 peak when it went up to 35 bucks. All right. This was just around the first empty Gox hacking. The power curve, if people were looking, and no one was looking at this at the time. Trollolo is a famous Bitcoin talk poster, which is what I modeled my date off of.

38:31He was thinking that it was a logarithmic curve, which is a little bit different, even more explosive at the beginning. In any event, it's not how it's working now. If you did a power curve regression at the time, it would have predicted March 2nd, 2026,$68 billion Bitcoin. Didn't happen. We had to wait till we sort of settled into the data. And that happened really around 2016. All right. So Giovanni, the Italian who is big on the power law, he did it a couple months before me. I did it in December 2018. That's when I first noticed it. And then again, anybody can calculate it now. It's very easy.

39:09But right around that time, if you start to look at the forecasted price at any given time, it's pretty close to today's power curve. It is higher, all right? Notice 170K, 190K, it's higher. And it will get pulled down. As you noticed, and as I said, two-thirds of the time, price is actually under the OLS. so we get pulled down pulled down all the way to 130 all right so 130 is the number right now and and indeed we're you know 50 under that so it's this huge buying opportunity in my opinion but let's look if that's actually the lowest except for of course the first like few months of data the actual lowest painted value is we have to go all the way here after the uh crypto winter as they call it, to May 2017.

39:58See what it's starting to show there? 125, 124. Yeah, 124, 125. So it's very interesting. What it's saying is we actually have about$5 ,000,$6 ,000 worth of room to spare before this lower-than-trend price action sort of pulls, you know, so we set a record low. And I would actually say that's a bullish indicator. That's a bullish indicator. It doesn't mean, again, the power curve is over if we set a record low. It just means, think about what that means. It means the curve doesn't always move lower. Yeah, it always adjusts every day. This is not a stock to flow, you know, fix sort of thing. It always adjusts the price, but it doesn't, you know, we are not at the all-time low here, which is good.

40:49And another thing to think about that is, so how do I reconcile this? Again, think about how crazy that was. The price in May 2017 was$1 ,700 per Bitcoin. It predicted, and when I say predict, I'm very, it's a very statistical term. I'm not saying it doesn't know the future, but it projected$124 ,000 Bitcoin by March 2nd, 2026. It's remarkable. It's a remarkable fit. It's pretty incredible. Yeah. And so the other thing to think about is, okay, so it says 124. Now we're 130, but we're pulling the power curve down every day because we're under it. That's true. But there's also another force, which is the curve itself moving upward.

41:31The curve itself moves up$100 a day. So again, I can't tell you how the math works out. You just have to observe it and see. But if somehow we went into like super bearish mode, which I, again, I can't quite see, especially with all the geopolitical tensions in the world. but we go to some super crazy bearish mode and the price stays at like the zeroth, the 10th percentile for a long time, then it is true, it's possible we could like threaten this sort of all-time low level. But this is, this remains, this is one of my favorite data points and it just sort of shows like, we're not as bad as it's ever been as far as the power curve, which is bullish.

42:12That is bullish and it just shows, I think the strength of where this curve is and after all that diatribe, I hope it kind of gets to your question of, you know, why is the price always below the curve or whatever? It is true. It's below it two thirds of the time, but that's just the nature of the distribution. It can also pull the curve up when we get to the boom phases. So you just have to look and see where it goes. So you know what my next question is going to be. So if the four-year cycle is still real, by like 2029, what price is this predicting or projecting that we're going to be at? Sure.

42:44So let's go back to the quantile. That's the best way to look at it. Let's go to the end of the decade. We're about 550. Okay, so... I'll take it. If you notice... Oops, sorry, that's 2029. And notice the difference. So let's even show... Some people say end of the decade is 2029. Some people say 2030. Let's go to 2029. Just to show you the difference in a year, by the way. So, 2029, the highest quantiles, 550, 400. The OLS itself, 235. But then let's just go out one more year. End of year 2030. OLS, 544, 550. 544 on December 27, 2030. And let's say the Q50, which would be the median, 516. Q60, 500.

43:39So, again, pretty remarkable numbers. and that number, that 550 number has been there for a long time. Like I've been talking about this on streams and projecting it for a while. It has been pulled down like during those boom years of 2021 and even though the curve was being pulled down, you still would be projecting by 2030 December like 590, 600 ,000. Now we're down to 550. So again, that's another example. It does get pulled down, but all it takes is another boom or just, you know, another crop of people to find the wonders of Bitcoin to pull the trend back up or back to a higher, you know, sort of level than it was.

44:22So I would say with pretty high confidence, we're going to be at 550, maybe even higher by 2030. Hey, I will take 550 by 2030. That sounds all right to me, Matthew. It sounds all right. We still haven't gotten a money supply, but, and I want to skip it. That's fine. It's good to... No, we can't skip money supply. I want to do money supply. We've done a 45-minute tangent there on power law. No, no, it's good. Let's stick on the four-year cycle for a second. This is a very checkmatey chart. You can get this at Bitcoin Lab. A lot of great charts there. Some of them costs, which I do pay for, but I don't know if this is one.

44:58So hodlers and loss versus hodlers and profit. I'm going to take off short term, just to look at long term, I think this pretty much shows what's happening. So this is UTXOs, right? So this is pieces of Bitcoin. Who's in loss? Who's in profit? Straight up. Very simple. Let's ignore the 2013, although you can see red certainly grows. But basically, every time we go into that year of bust after the boom, you get a lot of red. Okay, so percentage-wise, It can get, if you count long and short term, it can get even like to 50 % or 40%. It's a little bit less if you look at only long term. But you can see that just like there's a period of deep red before the market bottoms out.

45:47Lo and behold, where are we right now? I mean, I would say, again, this is where I am super bullish long term, but this is where you just got to look at the numbers and think about what's happening here. I mean, this could go lower, right? This could go lower. Mm-hmm. And even if it's not lower, I think one of the things that looks obvious from this is, it's going to go longer at the very least. Yeah. Yeah. That's probably even a more precise, better answer. It might not go lower, but it can go longer. And in my opinion, you just can't look at this and say the four-year cycle is dead. So yeah, we hit this quicker.

46:22Yeah, we didn't have as high of a boom last year. But in any market, if you hit your revenue by 50%, which is what happens in the bitcoin market every four years it's going to affect it it's going to affect it and um it takes a while to catch up so let me just put this on percentage again just to show you so here we go the the first two busts long-term hodlers in profit and loss deep right 80 70 90%. The next two, 40 % in loss. And here, where are we right now, just to show you? We're at, this is long-term now, this is not short and long-term, but just long-term hot loss. It was over 155 days.

47:06We're at 2080. And again, you'd expect that number to continually drop, right? The longer people have held coins. Right. It would be less, less of a fall, which it has been right so it used to be 80 and 50 or 40 now it's totally possible this could maybe only bottom at 30 but i just don't know the number i don't think anybody does you have to yeah you can we could do percentiles on this by the way i haven't done it yet i've planned on it but i would say lower lower and longer honestly so this is where i would caution sort of the bullish optimism we've been talking about it's just you know we're just under the curve and it It takes time to play out no matter how many ETFs are accumulating Bitcoin.

47:46It could come faster than prior cycles, but this chart shows pretty clearly a four-year cycle to me. This chart shows pretty clearly it's a good time to be stacking some sats. Yeah, yeah, definitely. You want to do money supply? Let's do it. Let's do money supply, all right? So another thing, just to remind people that don't know who I am, in 2018, I also published a survey of the global monetary base. So I do that every quarter still. And as this little chart engine that I'm making continues to evolve, people will get access to that like every day in a nice format. that. But the thing about money supply is you'll also see a lot of hype here.

48:29And I just want to try to remind people, you just don't believe the hype. You have to be careful with the hype. Okay, so I'm going to show you. Here's the Federal Reserve's balance sheet, just the Fed, just the Central Bank of the United States. This is the craziness after the global financial crisis, right? They flooded the system with money to not let any of the zombie banks go out except for Lehman. And Bitcoin was also born during this time. So Bitcoin on log scale. Central Bank is on linear scale. The green is the actual bank note. So you see the money supply always increases. And the blue, primarily the big blue number, that is the bank reserves.

49:05That is basically the digital money that banks have. Usually they don't want to hold it. But in this case, they did want to hold it because the system was so fragile. The Fed said, We're not going to let, you know, you guys go under for all your bad loans. We'll give you a bunch of bank reserves. And so this is literally the money supply. This is the printing press. Now, I just want to tell you a quick story. So I started publicly talking about Bitcoin 2017, 2016 a little bit, but 2016, 2017. So 10 years now. I can't tell you how many people in the space, whether they were genuine or not, or sort would have thought that they were, you know, honest about the numbers.

49:50They would say the Fed, all the Fed does is print. All the Fed does is print. All the Fed does is print. It was not the case. It was not the case. If you look here, all right, the total balance sheet of the Federal Reserve, okay, it was, the total number here is about$4.5 trillion. I need to get the total there. You don't see it. But it's$4.5 trillion, all right? and it was fixed. They actually fixed that number. They wanted to show the market they weren't going to print into infinity. And what happened to the Bitcoin price while the Federal Reserve was actually even started to pull its balance sheet down?

50:29Well, the Bitcoin price went up. Now, it is true the Bitcoin price went down, interestingly, when the Federal Reserve more aggressively pulled the balance sheet down. But then it started to go up again in a 2019 boom. All right, then you had the silly season really start to begin. And the market was way, already, people could argue, was way unstable here. In 2019, there was a big repo spike in the short-term lending markets of repurchase agreements, which is the type of money, basically it's treasuries that trade like money and you get a little bit higher premium. That market seized up. So they had to increase their balance sheet again.

51:07You see it here in 2019. So this was already before the madness of silly season pandemic started in the start of 2020. All right. So the Federal Reserve balance sheet went up. Bitcoin was going down. Then, of course, we did harmonize again. We did harmonize again here. And we all went up together in 2021. Okay. Bitcoin price and the balance sheet. Then the Fed, it was a very boogeyman number,$9 trillion. They never got to it. You can kind of see it's like they almost hit$9 trillion balance sheet, but they didn't get to it. and then they started to go down we had this uh weird that was the silicon valley yeah the regional bank crisis yep silicon valley bank crisis uh a lot of guarantees were given again to banks some liquidity so they popped the balance sheet up here but again powell uh actually to his credit said we got to normalize get down and there's other things happening here we don't have to get into all the detail the point is the balance sheet is going down all right from nine trillion all the way till today it's uh it's like six and a half okay but what happened to the price of bitcoin during this period it's going up it went up so yeah i i just want to say this in a um just a purely like transparent manner like i've looked at this six ways a sunday a lot of different balance sheets a lot of different uh central bank balance sheets bitcoin it's totally fine to say that when central banks print, eventually Bitcoin's going to go up to handle the loss of purchasing power.

52:35That's the total correct thing to say. But in the short to midterm, nobody knows. And what is more interesting and important, I would say, is Bitcoin's movement itself happens totally different than the other markets, which is a power curve. So that's a more interesting indicator of where the price could be at any given time. And again, I can't tell you where it's going. I can just tell you the relative risk. Back to the chart we just showed, we are at an extreme extreme low uh level relative to the trend so again it could always go lower we could go down to 50 whatever and set a new low set a new zero percentile in that power trend but based on all the prior data bitcoin we're at extremely cheap level okay and what is interesting is as you can see here the federal reserve the ecp is doing this too a little bit that And everybody knows what Trump wants.

53:26He wants lower interest rates with his new Fed share. So they're going to start printing as well. It doesn't mean Bitcoin is going to skyrocket once they start printing, but it could line up again where we could have a boom with an increase in money supply. Which is another thing, by the way. I'm never a... There's a lot of doom and gloomers in this space, right? I'm not that. I'm not going to say it's actually good that the financial markets go haywire and more money gets printed. Like, we know for sure that's baked in. They're going to do it, okay? But the point of showing you this curve over the long time and the detail of the Fed's balance sheet is here, I don't think they're that correlated at the moment.

54:09In fact, you can basically see, yes, the numbers both go up over time. But Bitcoin can go in a two-, three-year bull while the central bank balance sheet is going down, and it can also go up while the central bank balance sheet is going up. It just can do both. So I was talking to Alex Thorne about this recently. And so like you, I got into Bitcoin in like 2016, 2017. And the whole like Fed printing to make Bitcoin go up just wasn't a narrative then that I remember at least. And I think it would be really good to shake that narrative more because it's really like the macro side of Bitcoiners came in in like 2018, as I remember it.

54:46And I think all the Bitcoiners that came in sort of 2020 onwards after the COVID print associate like Fed printing money with Bitcoin going up. And I think that's a really limiting narrative. Yeah. Yeah. I mean, you can see it right here. They knew, everybody knew. Well, let me just take this to the next level now. So here's the Fed balance sheet with Bitcoin. Let's just do the global monetary base. Okay. So I'm showing you the Fed still. That's slightly different. I showed you total balance sheet. This is just the monetary base. So going back here, It's just the notes and just the bank reserves.

55:19That's the technical difference. There's other crazier things that happen with repurchase agreements. We don't have to go into it. But this is the global monetary base. So this is every central bank in the world. There's like 100 currencies in here. The value of their currency relative to the price of Bitcoin. So just like you said, the narrative is not always hold true. And look, Bitcoin can go up while they print less money. So that's what it did over the last couple of years. And then here, so this is a very sort of slow moving, unfortunately, chart. I try to get it right and it takes a lot of time now.

55:53So this, even December now is going to get updated probably only by April. So this is only September. But I can show you with the Fed, as I see, we do have indications it's going up. So that's for sure. We can look at individual central bank balance sheets. But again, this might even be a little bit higher for fourth quarter, 2025, and Bitcoin went down. So again, it's that narrative. It doesn't work on a day to day, a week to week, or even a month to month. You can, you know, you can certainly see some things that overlap. The 2021 was very, very clear, right? Very, very clear. But it didn't happen this last time.

56:32And I think there's, as a Bitcoiner, if you want to think long term, big picture, relax, like we talked about at the top of the show, the world is moving fast. A lot of just crazy geopolitical events. be prepared for, say, central banks printing money, but Bitcoin doing nothing. Or be prepared for central banks printing money and Bitcoin also going gangbusters. Both can happen. The data does not show us one way or another that Bitcoin has to skyrocket with central banks printing money. And again, I wouldn't even encourage that, frankly, for just a general attitude towards life. and I collect that.

57:13With like this narrative of the debasement trade, I think that probably would happen. If you just go back to that other chart, because like you say, you can see that those Fed balance sheets look like they are starting to go up again. How aggressively do you think they will go up? Do you think we'll see another big print? Actually, at the moment,

57:35so when the central bank balance sheet goes up, interest rates go down. Okay, that means they're stepping in and buying. So on the other side of this trade, basically the other side of all of this money is basically the Fed's portion of government bonds. They have plenty of room. And actually I need to pull up another chart. Let me show you a different way to look at this. The United States, like I've said this a lot, the dollar is the best looking horse in the glue factory, right? So another thing that you can say with this chart, all right, let's take Bitcoin off. You see how this chart has gone down since 2021, 2022.

58:09It is true that central banks around the world, they all realize that they responded crazily, whether that was right or wrong. All of us in Bitcoin space would think it's wrong and unnecessary and all the rest. But they knew that they had to pull it back. They did. But also, they actually didn't pull it back as aggressively as this looks. The Fed did, as you can see for sure here, the Fed pulled their balance sheet way down from nine to six trillion, basically. if you look at the global number this is a witgenstein's ruler thing i'm showing you in dollars but if you can just imagine like euros and yen and yuan they did go down but actually it it's it wouldn't be this low if other currencies also didn't lose value against the dollar so when they lose value against the dollar this chart looks even worse so that's another thing and so this goes back to the dollar depacement trade or whatever even the position that trump might be in with all of this, all of Putin's buddies toppling all over the world, these dictators falling over the world, the dollar might come out of this looking pretty good, even stronger, and maybe even too strong, you can argue, and that's what Trump would argue, and that's why he would try to debase the dollar more.

59:22He just wants low interest rates for real estate deals, as we know, but that's the argument he could make. And let me show you another chart that basically, I know you don't like to do politics, Danny, and I'm not going to go into it, but this is the same chart, it's a monetary base, but it's in the lens of free world versus autocracies. Now, if there's a sprightly young 20-something saying, oh, we don't have a true free market, whatever, yes, I know. Nothing's perfect, okay, but go live in Pyongyang if you don't think that we don't have examples of free markets in the West versus autocratic countries.

59:59So here I have, basically, I have the United States. I have NATO, looking from a military sort of perspective, non-US NATO, which unfortunately includes Turkey. They're definitely an autocracy. Japan, Switzerland, Australia, South Korea, Taiwan, Ukraine. Then I have autocracies, China, unfortunately Hong Kong, that's just rolled in, Russia, Iran. And Iran is even overstated because I'm using official market rates and it's not even nearly as high as this. And then rest of the world. Rest of the world is basically global south. You got big countries in there. You got India, Pakistan, but that's the global south.

1:00:33So it just shows you the difference. And actually, don't look at this now as a debasement, but look at this as just how much money countries have. I'm going to show you this as a percentage. Okay, so it's coming. Just give it a second.

1:00:49This is sort of interesting. So people always talk about China's position and they're gearing up to invade. They've already said they want to be ready at least to invade Taiwan by 2027. That's been publicly stated. But look at the financial position of the monetary base. In dollar terms, it's true. This will look a little bit different in different currencies. But in dollar terms, China actually was its largest proportion of the pie back before the global financial crisis. 26 % of the pie. All right. now, and when everybody hated what the communist regime was doing in China, and of course, their dishonesty of all the pandemic, we don't have to go down the road.

1:01:30They were 15 % of the pie. Now, they are up to 19%. Okay, so they're growing again. But that pie is pretty weak on that side, like Russia. I'm gonna have to hold my tongue to say too many things. But people that know me know I live on the border of Russia. And they're, you know, Putin has lost three of his buddies in the last 15 months. He's lost Assad. He's lost Maduro. And now he's lost Khamenei. There's a new supreme leader certainly already tapped. We don't know who it is. And Iran's going to try to keep fighting, whatever. We're not enough to comment on the war. But my point is, this is a pretty weak pie of autocracies.

1:02:12And the dollar might come out looking OK here. and uh i could make a joke you know as long as the united states doesn't flip red on this chart but that doesn't happen so that doesn't happen generally you know the rule of law the free world even as sort of crazy as it is you might you might find support for the dollar a lot stronger than people might be anticipating and even with that strength that would allow trump to uh debase it more. This kind of plays into the Brent Johnson dollar milkshake theory thing, right? Like it's all current, all fiat currencies might fail, but the dollar will be the last one to fail.

1:02:49Yeah. Yeah, for sure. For sure. You know, I think people have said different variants of that for a long time and it's absolutely the case. So I don't have this updated through February, but I do, I think, through January. This is the all-time United States debt. And basically it's the, it's that chart I showed you, the Fed's balance sheet. This is the liability side of the Fed's balance sheet. Okay, this is actual printing press, the money that they print to buy debt. And here is the asset side of the Fed's balance sheet. So the dark green is the actual treasury securities that they own. So let's just zoom in to, let's say, post-global financial crisis era.

1:03:29You see this COVID print, pandemic print here. And if you take this as a percentage, the picture becomes very interesting. So in 2021, the Federal Reserve owned more United States debt than it had ever owned in its history. 28 cents on the dollar. This is literally what you would call the printing of debt. So this is the, what you see here is the visual of debt monetization. For every dollar that the United States had issued in debt throughout its history, this was a record in that the Federal Reserve printed 28 cents of that debt. that's that's what it means which is insanely high number it is a it's a very high number but think about this other hyperinflations they go to 100 the only buyer of zimbabwe dollars would be the zimbabwe bank okay so um you go powell again to his credit to his credit higher interest rates he he uh said it very clearly the jackson old speech a couple years ago and that this was sort of like his life's goal and he did it so now look we are at a level already pre pre-pandemic 16 16 or so of so we've gone from nearly 30 cents on the dollar down to only 15 cents and that's actually a prior record that was set in like more distant times in the vietnam war it's about 15 16 cents on the dollar at the very end of vietnam war um by the way that that percentage went down, not because the Federal Reserve was printing less money, but because the United States started to issue more debt.

1:05:08So. But the interesting thing about that chart is that while it does go down in the interim, like that dark green section is only going up over time. A hundred percent. A hundred percent. Yeah. I mean, this is, it's not going to end well. I'm not saying that this is where Bitcoin plays into it. It really, this is the long-term Bitcoin thesis. At some point, every nation is going to want to get, I'm not going to say they're going to want to get off all fiat currency. And I know the timing of that. Of course, I don't. Again, just look at the relative risk of the power curve and where we are. But the last thing they want to get off in the fiat world is probably dollars, because the dollar is still managed in a way where they want to try to protect it relative to the debt.

1:05:53And they have actually done that. Again, the numbers tell a very different story than the narrative. Okay. So to be clear, for those that are listening, we are far from the record of monetizing debt. We're only at 16 cents on the dollar. I'm not saying it's a good thing. I'm not saying I'm not defending the Federal Reserve. I'm not saying, you know, I'm not a Bitcoiner, whatever, if people are thinking about these different things. I'm just saying this is the reality of the situation. So if Trump comes off of, if Trump has a success, and I'm not sure he has planned that out, but if he does have success in Iran and somehow there's regime change, you could see plenty of room for people to want to buy dollars, use dollars.

1:06:32And that would actually give Trump even more room to make this percentage increase and thus have lower interest rates and thus, you know, put another sugar high for everybody for another boom. So I still remember your original question, Danny, it's not going to go as high unless there's a major like shock to everyone in the free world. And I use that term strictly like in the free world. Like if if this goes on in Iran for like 50 days or 100 days and the Strait of Hormuz can't get opened and shipping is completely cut off and there are major, major geopolitical disruptions, then it could be like some issues here.

1:07:15But if if somehow some sort of normalcy goes, let's even not even theorize with what happens. Maybe some new regime in Iran stays and Trump doesn't fully get the goals done or whatever. You could still generally see pretty moderate growth of economies. Shipping lanes get back open and Trump has plenty of room to print. And then you could also see even a better outcome was even more demand for dollars. And Trump doesn't even need to print as much, but you could still get interest rates to go down. So the point is, I do not see in the future any sort of pandemic-style printing of money or 2008-style printing of money.

1:07:58It doesn't mean it couldn't happen. It doesn't mean there's not massive debt problems in the consumer credit market and other things. But there are... I do have to say, as someone who lives next door to Russia, it is actually encouraging to see dictators falling. How that's going to work out for the free world, the democratic world, very much an open question. But I would say the United States is actually at a relatively decent position, how their balance sheet looks. And certainly, certainly, if something bad did happen, they have plenty of room to print more. So again, that's just my narrative, sort of how I'm seeing the world.

1:08:37Again, none of it has to do with, I have no, everything I just said has nothing to do with what's going to happen to Bitcoin in the next two to three months. For that, go back to the power curve. For that, stick with the statistics. Stick with, for now, the idea that the four-year cycle is not broken. And judge your opinions, your decisions, based on the relative risk of where Bitcoin sits relative to this amazing growth trajectory that it's on, which is a power law. And Bitcoin doesn't need the Fed to go up. I love it, man. This has been cool. Anything else? We've been through a ton of charts there.

1:09:17Is there anything else that you want to go through before we finish? We have. I think one thing I teased on that I did not actually fully get to, let me just find it is the is the how a normal trajectory of a of a stock would grow these are the fastest growing stocks in the world this is an ai trade so this is magnificent seven um you know nvidia microsoft apple and tesla i wouldn't put tesla in here frankly but because i don't think they're pure tech but that's that's what it is so this is now this is similar this is that evolving this is a good way to end the pod, actually. So it's the same evolving curve that I started before, right?

1:10:01I said that notice how with Bitcoin's power curve, it gets closer to the line, but actually farther away from the extremes, right? With this one, this is an exponential chart. This is compound growth. This is what we talked about. This is totally different. This is how all financial markets grow. It's a straight line on log linear. But notice how Bitcoin set its extremes at the very beginning, right? 7x over trend, 0.1x. This is setting the extremes. This goes back to the same life of Bitcoin, by the way, 2008. This is setting the extremes around the pandemic and after. And I would dare say, in fact, this is not even a risk to say this at all.

1:10:44These markets can go back to the extremes very easily because they're exponential, because they're more volatile. They don't follow what a power curve follows. And the math is totally different in log linear space. And so you can actually see it's still a great curve. All right. 98 % R squared, 98.7 % R squared. But look at the volatility. And by the way, I'm not saying don't invest in MAG7 stocks. Like it's, you know, as long as this AI trade keeps going, it's been a great, you know, look at these keggers. 27%, 25%. I imagine like passive flows count a lot to this as well and things like that.

1:11:17But this straight line up just looks like eventually that's unsustainable. That can't continue forever, surely. Well, you know, the stock market itself, if you did this over 200 years of stock market, you'd have a straight line. It'd be a very gradual, it'd be like a straight line. And then the next, you actually get a faster, it's what Jeffrey West calls super exponential growth. You get faster and faster curves. um you know i did a i did a a pod not a pod a uh a circuit last summer around the european bitcoin conferences and i was trying to compare jeffrey west theorized uh about the singularity as a mathematical event not like ray kerswell talking about you know if it's ai or whatever but there's no doubt everybody's getting you know the world is moving faster people trying to figure it out there's a couple scenarios first of all i think it's totally possible that all this sort of circle jerk of capital that's flowing into the AI companies, which is pretty well documented, right?

1:12:15Like, you know, Microsoft invested into Anthropic and OpenAI and Amazon as well and back into Amazon and all this stuff. That could be a bubble. It could be like something as extreme as you go up here and then you go all the way down here, right? That's totally possible. But at the end of that carnage, it's totally possible that we have something like, Like, you know, Amazon, the strong, well, you know, functioning companies, just regular business, well-managed companies could come of that out of that better after the carnage. Now, again, I'm not predicting it. I don't know for sure. It does seem crazy.

1:12:53But if you look at this curve itself, this is the market cap of the Magnificent Seven, all right,$20 trillion. They're actually right on trend. It's not as extreme as it was back in 2021, right, with the meme stock trading. It's not as bad as it was in 2022 when it went down to$7 trillion. So we'll see. Maybe it could run for a couple more years. I'm not sure. But the point of bringing up the speaker circuit that I did last year was Jeffrey West, he did not talk about Bitcoin in his book. It's a really good book, Scale. People should read it if you want to really dive into the numbers of what we're talking about with the statistics here and regressions and power laws versus exponential curves.

1:13:31He kind of theorizes that we're going to move into some sort of a new, his singularity is a mathematical singularity. And he theorizes that it could be technology that takes us to the next level, but he's just not sure. And he doesn't mention Bitcoin. And I think Bitcoin is a nice answer to his theory of where a lot of this craziness could end. And it could kind of smooth out the volatility and we get onto something more grounded. And it's like the good analogy that Ray Kurzweil talks about is the transcendent man. OK, so it might have seemed, you know, crazy in the 50s to have rock music and the devil was, you know, going to take over society.

1:14:12But, you know, we moved on from that. You know, it didn't take over. And we, you know, we we then have, you know, the World Wide Web and that seems crazy. Then we have the dot com boom. That seems crazy. But we just keep moving forward and forward. So I think all of that stuff is going to hold. Again, regular markets have huge booms and busts. But the beautiful thing about Bitcoin and the thing that is really undeniably different about Bitcoin is it moves on a more sustainable curve. And so I think I've been theorizing a lot about this on my own show. What could it mean? What could it mean for interest rates, growth, all that?

1:14:44Let's not get into that too much at the end of your show. But I do think five, 10 years from now, when Bitcoin is theorized to be$20 trillion, right, in market cap 10 years from now, let's say, roughly, that's going to match the global monetary base. I mean, I plot it quite clearly. Okay, by the end of the 2030s, you're going to be at the level of global money. And Bitcoin is going to be growing on a sustainable curve. Global money is going to be growing on an unsustainable curve with a lot of interest, a lot of fiat interest. those things are going to merge. They're going to merge. How it happens, I still don't know yet, but that's the hope that the Bitcoin network gives to us.

1:15:26So that's what I'd say about all that. I think that's the next show we should do. Next time we're in the same place, let's do that in person and do Bitcoin is the singularity. Good. Good, my friend. I'm good for that. Awesome. Matthew, this has been fun. I'm going to see you in bed for in a few weeks. Thank you. I appreciate you coming on the show. No problem, Danny. Looking forward to it. Bitcoin is cheap. Now is a good time to stack some stats. Ed, tell everyone where they can catch out your stream. Yes. So, OneBaseMoney, you can find me at the handle OneBaseMoney everywhere, basically YouTube, Twitter, Noster.

1:16:01And the channel is called Porkopolis Economics on YouTube. Let's go. All right, man. I will see you in bed for a few weeks. Thank you. All right, Danny. Take care.

1:16:16Thank you.