Crypto Spring Turning Into Full Blown Bull Market

Transcript

Hi. I've got uh 20 minutes to talk to you about uh something I think is very important, which is congratulations. Uh uh We are at the start of a crypto bull market. And uh if I had to give it a date, I'm going to say it was August. But you might be doubting if it's a crypto bull market because people think it's fragile, but that's exactly what happens at the start of a bull. So, let me walk you through my presentation. So, first, we are having a full-blown crypto bull market. There are too many signs that have happened that only happen in a bull market.

Um so, let me start. The first is we have institutional backing. I mean, it's not just Franklin saying a bull market is starting, it's Fidelity, BlackRock, all the major players. I've never seen this in the past three cycles of crypto winters, never seen institutions declare this. We also have a technical argument. Bitcoin is above its 200-day moving average. >> [snorts] >> That happened on August 19th. Also on August 19th, Ethereum had a golden cross.

But see, the last time Bitcoin crossed above its 200-day, that was August of last year, April of last year. >> But since 2010, Bitcoin averages 80% positivity over the next 6 months, 200% gains. Ethereum averages 290%. Okay. Now, you can see this on a chart cuz I can make it simple. These are the other crosses above the 200-day. Out of the last nine crosses, eight were bull market starts.

We also have positive ETF flows. You don't have positive flows into crypto in a bear market, only in bull markets. Only in bull markets for equities do you have positive flows. And then we have proof positive because crypto in the third quarter of this year, June to September, was the best performing macro asset by a country mile. The AI stocks were down in the quarter. >> We had very terrible financial conditions. We had a hawkish Fed, surging oil, global bond yields going up, and tight financial conditions, yet crypto outperformed. That's what

happens in a bull market. Crypto is ignoring the fact that basically the Fed's been hostile. And lastly, uh it's from coming from Tom DeMark. >> He is the ex- one of our exclusive advisors for timing. He's saved Bitmain at least a hundred million dollars this year. He is worth his money in gold, and he says we are confident Ethereum will continue to trade higher. He thinks [clears throat] Ethereum should easily break 3,000 in the next few weeks.

And lastly, I know it's a bull because the four-year cycle bottomed. So, if you set your clock, >> the bottom was October 5th. So, we are two days past the bottom for crypto. So, in short, it's all in the math. Uh we are in a bull market. But here's the thing. This may be the biggest bull market uh we've ever seen, okay? So, I'm going to give you four reasons that this bull market is different than other bull markets, okay?

So, as Joe Lubin says, you're not bullish enough. The first is there's a big institutional story around tokenization. In the bull market of 2016-2017, that was about ICOs. It was a retail story. 2029 or 2019 to 2021, that was an NFT boom, but that was a retail boom. Of course, some new tech and great tech came out of that. Last year, we had a stablecoin boom.

That was cut short by that October 10th auto deleveraging event that [snorts] wiped a lot of people out and started a huge crypto winter. But here we are. We have an institutional wave coming. BlackRock, asset managers beyond BlackRock, want to tokenize everything on blockchains. Vlad Tenev of Robinhood, who I think is going to end up being a top 10 financial institution within a decade, says, "We are the beginning of a supercycle. Everything running on traditional financial rails will be tokenized."

That's a massive wave. How big is that wave? Well, crypto members are $2 trillion market. There's $200 trillion of liquid assets outside of crypto today, growing by $7 trillion a year. If you ever wonder if there's money to be building data centers, there's $7 trillion of new money every year. Just the top three markets alone is $160 trillion that can go into crypto. Remember, the ratio is 1 to 37. A trillion dollars going into crypto would turn it into a $37 trillion market. And of course, a lot of this is happening on Ethereum.

BlackRock, JP Morgan, Robinhood, they're building on Ethereum. Ethereum, of course, has a massive community. The number of developers today is equal to the entire rest of the community combined. So, it's a massive wave. The second difference in this bull market >> is there's a huge wealth transfer taking place. I don't think people have talked about this enough. But Vlad says it's a hundred trillion over the next 10 years.

We can see this. This is from the IRS. In the last crypto bull market, okay? There was 400 billion dollars of inherited wealth. In the next cycle, it's probably close to one and a half to two trillion. This is a baby boomer or older passing away, it's inherited by a millennial. That allocation goes from bonds to equities and crypto. Massive massive inflows. A lot of it's going to come out of private equity and private debt. At least 12 trillion. So, consider that a massive buying power.

And of course, I think this is explaining why we're having a huge huge outperformance. I mean, staggering outperformance. The third thing >> [clears throat] >> that's happening this cycle >> that didn't happen in past cycles are the digital asset treasuries. You're wondering what role can they play? Well, foremost the Dats are the friend of crypto in a bull Okay? In this bear market, people wondered do Dats make sense? By the way, Bitmain is a digital asset treasury.

And that's because in this bear market only four digital asset treasuries are trading above their net asset value. However, including Bitmain. But, in this next bull market I think all these Dats are going to recover. And they're going to start buying crypto. In a bull market, that means they're going to support the underlying blockchain. Why is that? Well, cuz they take out supply. >> The Ethereum Dats own 7% of crypto supply today.

Bitcoin owns the Bitcoin dots own 6 and 1/2%. The Solana dots 3%. But look at hyper liquid. I mean, it's been a very successful chain and project, but part of it is the hyper liquid dot owns 14% of the supply. When you take out supply, take it out of the market, and then you have a bull market, guess what? The price is going to go up a lot more. And the Ethereum dots own the largest of the big three. 7% of the supply.

That's that's not, you know, in the last bull market, that didn't exist. That's why if you think about what's the upside for ETH, I think you're underestimating how much it can move. And lastly, there's a new story. You can see it out in this conference in the exhibitors, crypto is an important downstream AI story. So, AI is of course a mega trend. But everyone thinks it's just about semis and memory and bottlenecks, but that's not true. As the semis and the memory have corrected, the downstream stocks have outperformed.

Mag 7, software, and crypto. Uh A16Z Mark Andreessen and there I know your next panel has someone from A16Z. They consider agentic payments the grand unification of AI and crypto because AI agents are going to carry money. They might carry a Visa card in their wallet, but most likely they're going to carry a crypto wallet. And we know non-humans are becoming the dominant source of traffic. In fact, today they're also the largest consumers of crypto of compute tokens in AI. Is other agents.

And we have to be careful because agents can now bypass captcha. We can't even tell who's who. So we going to need to keep humans in the loop. This is where crypto and finality and smart contracts and enforcement all come into play. So again, >> I don't think you're bullish enough. This is the biggest crypto cycle ahead. And I just want to emphasize that. So whatever you thought your upside would be or if you're doubtful we're in a cycle because you've sat through the last 12 months and it's been pretty tough.

We can see it here. This conference has so much crypto energy. That was [snorts] also true at KBW last week and it's a big change from what we've been experiencing. So the last point I want to make is let's say that you're bullish on ETH and I think you should be. You should be bullish on the L1s. I had dinner uh in Taiwan recently with some of the people I met 10 years ago when I first started researching Bitcoin.

So imagine 10 years ago Bitcoin was under a thousand. And Bitcoin's now 80,000 today. So these venture capitalists when I had dinner with them, I expected them to be like living in private jets because at a minimum if Bitcoin was an 80 times return, their ventures could be a hundred or a thousand times. But here's what they said. They said that their venture returns have been okay, but they wish they just bought Bitcoin.

And that's what I'm telling you now. You want to have the maximum exposure to Bitcoin and Ethereum and even Solana in this cycle. I think the L1s are going to capture a lot of the value. But there is a way to outperform the L1, which is buying the digital asset treasury. And Bitmain is positioned to outperform this cycle. I want to make that point really clear. So, uh here's three ways we're doing it.

The first is Bitmain maintains the maximum exposure to Ethereum in this bull market cycle. Here's Ethereum's price. It's been consolidating for 5 years. You know, the longer the base, the bigger the breakout. The last time Ethereum consolidated, it had a 227x. And then the the prior time to that, 54x. I think, given tokenization, AI, everything I talked about, the DATs and the wealth transfer, it's a 25x minimum. Okay?

Well, what does that mean for Bitmain's share price? The The stock is currently 26. And Bitmain is 90% correlated to Ethereum. Well, if Ethereum gets to 22,000, which I think's the low target, Bitmain's share price goes from 26 to 300 to 500. That's a massive move. Uh if Ethereum gets to 62,000, Bitmain's share price is 1,200 to 1,500. But, you can see we're really focused on making sure Bitmain's share price has maximum exposure to Ethereum.

The second thing is, we wanted to get to 5% of the supply. That's a hard cap. We're not going to be accumulating past 5%. Because people don't want to think we're diluting shareholders, which we have not been. Because in our first year, look at all we of what we've accomplished. Bitmain's only been around for 15 months and already we we've broken ground, created a lot of firsts. But let me walk through few of them. The first is we reached 6 million ETH.

That's 4.9% of the supply. I want to focus your eyes on the bottom. Bitmain is also been added to the Russell 1000 index. That's the US large cap index. There's only six crypto stocks in the Russell 1000. We're the only Ethereum play. That means when large institutions and hedge funds say they want to get crypto exposure, there's only one stock they're going to buy, which is Bitmain.

But we said we have a 5% hard cap. We're not going to own more than 5% of Ethereum. That's something that Vitalik kind of asked us to do, to stop at five. Justin Drake, the foundation. We're going to stop at 5%. So, where do we sit relative to that 5%? Well, this is our accumulation of ETH over the past 15 months, okay? And you can see we're currently at 6 million. That took us little over a year.

We thought this would take five years. It took us little over a year. More importantly, we did this all in the middle of a bear market, okay? So, we bought ETH while no one wanted to buy it. We were glad to buy it cheaply. We bought a lot at 1500. But it's in the middle of a bear market, and now we're going to stop. We only need to get another 100,000 ETH to get to 5%, okay? But we're going to stop there. The reason we're going to stop there is this chart.

We did all this buying in a bear market. in fact, I kind of think we helped set a floor for ETH. We protected the downside for ETH because we were buying. But now, we're done stacking in front of a 25x move. So, if we have a 5% hard cap, that means we're going to outperform ETH on the way up, right? Cuz you don't have to worry about us trying to raise capital. We're done. Now, we're designed to outperform Ethereum. That's what we started the company to do, and I can show you that we've done that because last year, we started Bitmain on June 30th, and the

from June 30th to December, Ethereum was up 22%. Bitmain gained 500%. 48,000 basis points of outperformance. This year, in a crypto bear market, Bitmain is up 3% while Ethereum's down 9%. We outperformed by 1,200 basis points in a bear market. And in total, you can see we delivered for shareholders, 40 or 53,000 500 basis points of outperformance. Now, keep in mind, there's a bull market starting.

It's probably going to look a lot more like 2025. There's other things we've done. We bought back stock to protect shareholders. In fact, we did the largest crypto buyback ever in history. But here's what's interesting. This is Bitmain's share price this year. As you know, we employ Tom DeMark. We decided our stock got too cheap right here. >> July 14th. We commenced our buybacks. We did it for about a month, spent $350 million. You You can see we helped protect the stock on the downside.

And as soon as we stopped, by the way, the stock went up even more. That's what buybacks are supposed to do, protect shareholders. We also set a benchmark price for Ethereum credit. We issued BMNP, a perpetual preferred, at $80. It's gone straight to 99. In fact, today it's at 100. Okay? Here's the thing. It's a preferred stock. It's like a bond. Well, guess what? In this From the time we issued BMNP, long-term treasuries fell 8%.

Investment-grade bonds fell six, high-yield bonds fell three. Our preferred went up 24%. We are even the best-performing bond in the world. Okay? If that doesn't tell you that a bond holders like owning BMNP, BMNR shareholders should be happy owning BMNR. And we have the lowest cost of funding. BMNP yields 9 and 1/2%. I think that's too high, but as you can see, compared to Bitcoin preferreds, which are around 12, and Solana preferreds, which are around 15. By the way, I like both of them. I'm a fan of Bitcoin and Solana. Crypto is not uh

winner take only all. And lastly, we're going to leverage our scale. We have Maven. It's our staking operation. It's generating a million dollars a day in staking rewards. We have Eight Co. >> It owns a big stake in Opening Eye. That stake has already jumped in value, and it owns the World token. And it's undervalued. And of course, we have a huge stake in Beast. And lastly, which I think is the next financial services company, but what I want to just leave you with is the big money not in the buying and the selling, but in the waiting. From the great Charlie Munger.

He is the original hoddle, okay? So, just to conclude, this is the biggest crypto bull market and you're not bullish enough. Thank you.