James Lavish on the debasement trade and Bitcoin

Transcript

GM, good morning. Welcome to the Milk Road Show, the daily crypto show where it's always October. I'm your host, John Gillan. Today, we are joined by one of Bitcoin's finest gentlemen, James Lavish. James is the co-founder and managing partner of the Bitcoin Opportunity Fund with over 30 years of experience in institutional investing and risk management. He authors the informationist newsletter, simplifying complex financial, economic, and investing concepts for a wide audience, as well as bulling Bitcoin. Today, we're going to discuss the debasement trade going mainstream. Is this a top signal? Is it the start of a new rally? We're going to talk about Bitcoin. What's going on? Are we going to see a blowoff top or just keep grinding into 2026? And I also want to get his thoughts on the macro picture because I host the Milk Road Macro podcast and James is a macro

expert. So, if all that sounds good to you, make sure you like and subscribe. Share this episode with somebody who's going to enjoy it. And as a reminder before we dive into today's episode, I want to tell you all about something that's changing the game. Milkroad Swap. With Milk Road Swap, you can sh seamlessly trade on Ethereum base, Arbitum, and Salana all in one place. There's very low fees. We built this because we wanted to use it and so we're sharing it with all of you as well. Click the link in the description below to check that out. Today's episode is brought to you by Nexo, the platform that grows your crypto without locking it away, as well as Figure Markets. Grow your cash like a bank. No lockups, just real returns. And without further ado, welcome to the Milkro Show, James. How are you, sir?

>> Hey, John. Good to be here. Thank you for having me. looking forward to our discussion. >> Me too. It's a great time to have you on the show. Uh I wanted to start with something that I think got a lot of people's attention. Uh JP Morgan recently published something discussing what they're calling the quote debasement trade uh and how it's benefiting hard assets like gold and bitcoin. You and a lot of other bitcoin bitcoin investors have been pounding the table on this thesis for years. How important is it to you to hear this coming from an institution like JP Morgan? Yeah. So, um, what's interesting about it is that it was echoed by Morgan Stanley yesterday, too. So, I even put out a tweet about it, um, being the two Morgans are now jumping on board. What's not what's not interesting is that yeah, they're

recognizing that that there's a there's a problem with the the Treasury Congress overspending, fiscal deficits leading to the need for um the more issuance of of more treasuries. And that is, you know, that's kind of pushing long-term yields down. It's um I mean up uh meaning that the uh the the expectation of the the long-term inflation in the United States and on the US dollar is is growing. Uh so that's pushing the prices of the of those uh bonds down as people are not, you know, there's just not as much demand for them. And uh and so that's typically your it's been your riskoff

asset for many years. But when you run negative real rates as we have for about 15 of the last 20 years or even more um then investors start to wonder like where can I hide? The obvious answer is gold and gold has been a store of value for thousands and thousands of years. It's it's been, you know, uh you can look at gold and take an ounce of gold and go back to Roman times, buy a beautiful toga with one ounce of gold, uh or 400 loaves of bread, and you turn around today and it's about the same thing. Uh you can buy a beautiful, um custom-made suit or, you know, around the same four or 500 loaves of bread with an ounce of gold. It hasn't

changed. So, it stores its value and uh investors know that. Is it uh is it a risk off? like is it a riskless asset? Of course not. There's there's nothing that's riskless. But what investors are realizing is that there's a need to get out of dollarbased dollar denominated uh riskoff assets like treasuries. There's a few reasons for that, John. And one of them, one primary reason is when Russia started the war with Ukraine, we turned around and in a catastrophic mistake, uh, Biden turned off their access to the Swift network and seized the US treasuries that they held. I mean, it was just catastrophic. That basically

signal to the world that, hey, um, if we don't like what you're doing, then we're going to we're going to seize your assets that are denominated in our in our treasuries. And you know, I'm pretty sure that there's not a worse message to send the world that you need buying your treasuries than to say that, you know, we may take them from you. Even though we need you to buy them, we're going to take them from you. So that that kind of started this whole conversation with bricks, with the uh Brazil, uh Russia, India, China, and South Africa starting their own currency. That's not really what's happening. They're just trying to avoid the exposure to US treasuries. All right. So now you get into where we are today. And today we now have uh these

relentless John these relentless uh deficits that they're not going away. We we have a president that was elected that said he's going to do his best to balance the budget. And he uh he put people in place uh to head up what's called the Doge Commission. for those who uh know what that is, who don't know what that is, that we're supposed to cut costs and uh get us closer to um to a balanced budget and maybe even a surplus. Uh the reality is that the math is not it just won't work. Um, I've written a lot about this in in my Substack newsletter, uh, and about the the, uh, the debt spiral and how it just the math

is not going to work with the the structural deficits that we have because of expenses that are in place through legislation that just you can't cut. And so, you know, they took off a few hundred billion dollars, which is a lot of money, but it in in terms of what we spend a year of$7 trillion dollars, it was like moving, you know, chairs around the on the deck of the Titanic. So, the world's recognizing this and they're recognizing, oh, there's just no way that the that if the the US is not going to get to surplus. And for for those who are who are saying, yeah, but Clinton did it. He did it way back. No, that was just accounting, you know, it was is kind of accounting magic where they were borrowing Peter to, you know,

pay Paul and it just it wasn't really uh a surplus. So, um we just don't run in surplus and we haven't basically since the 1971 Nixon took us off the the gold standard for good. Um we just it's easy just to spend issue more debt borrow more and then what you what happens when you have fiscal deficits like this it's inflationary it creates inflation it debases your currency meaning that your dollar becomes worth less so if you had a dollar sitting in the bank in 2020 that dollar is now worth 75 cents and uh just five years later it's down 25% and that kind of tracks with the 10 year

down 50% kind average of what happens to your dollar. The world is recognizing this and uh and they don't want to hold US treasuries. You've seen a decline in holding of US treasuries. So what are they buying? They're buying gold. The central banks around the world are buying gold. That's why gold has has shot up to now almost we're we're looking at a gold price today that it's just mind-blowing that is now it touched 4,000 yesterday. All right. So, it's up over 100% from just a couple years ago.

Now, what else are they buying? Well, of course, people are buying securities and houses and other things to store their value. But what's interesting about this to get to the punchline of what your question was is the debasement trade is now these banks are starting to talk about Bitcoin in the same sentence. Not the same paragraph, not the same story, not the same book, but the same sentence as gold, which is they're saying, "Hey, look, this is digital gold. We understand it now." Then if you have not done the work on it, you should do the work on it to understand it better to understand why this is such a strong store of value. And that this can be as good or better of a store of value than

uh than physical physical gold uh for a number of reasons. your Bitcoin uh followers understand this fully. And I'm not going to go into that uh and bore them, but this is really significant because now you've got these big institutions that are u they're giving the green light to their to their anal their analysts, their portfolio managers, and their customers to say, "Hey, look, you should own a few percent of this in your portfolio." And that's echoing Ray Dalio, who said it just a few weeks ago. He said, "You should own 15% of your portfolio as much as 15% of your portfolio in gold and Bitcoin." He said he likes gold better. I mean, he's old guard, of course he does, but he

understands Bitcoin. He thinks that that's uh, you know, for the younger generation, that's where they're going to go. And it's not like this. What's most significant about this is that they're starting to understand like the the conversation is changing dramatically from just a few years ago where it's a Ponzi, it's worth nothing, it's rat poison, it's it's uh you know a pon it's a it's got no underlying value. It's going to zero. Jaime Diamond saying these things at Davos. And now turn around just a couple years later and boom, his own bank is putting out a piece saying that you should own some of this as the debasement trade. And that debasement trade is what we just what we just described, which is watch out as

your dollar gets debased. You need to own assets. And these are the best horses to own in in this trade. >> James, I really appreciate that context. Uh the macro backdrop behind all of this. And one thing that really stands out to me from what you said is like you're right these institutions are saying gold and bitcoin which is much different from just like mentioning like some people are using it's they're they're including it now uh in the same sentence as you said it's a huge shift. Another shift that you talked about is how there's a lot more institutions recommending an allocation to Bitcoin to crypto. Morgan Stanley as you mentioned their global investment committee is now recommending this I think just came out this week a 2 to 4% uh portfolio allocation to crypto. um they're not the first institutional wealth managers like

you mentioned several others. Black Rockck has also been saying 2%. Um how are you thinking about this in terms of like what it means for the market and investors? Is this a top signal that's like okay now that a basement trade has been figured out by everybody and it's so sort of played out or is this going to kick off a new leg of bullish momentum and push Bitcoin even higher from here? Yeah, it's a great question and I get this I get this question a lot because people say well you know you you say the institutions are coming we have the ETFs they've got a hundred billion dollars in them now so the institutions are obviously here and that's not really the case when I say institutions like we're talking about BlackRock has their their ETF IBIT and it's if you pull up the list of holders it's not your big

big institutions um it's not your corporate treasuries you So, uh, yeah, just pull up, um, yeah, let's see. If you pull up ibbit and you pull up holders, you can see in here that, you know, yeah, you've got you've got Goldman, Jane Street, Millennium, you know, these are like you've got some momentum stuff in here. Um, but by and large you're you're looking down here, Morgan Stanley. You're not seeing the big institutions like Texas Teachers or, you know Kalpers or Guggenheim, you know, like they're not really in here yet. You've got

Citadel, you know, you've got Pine Ridge, uh, Harvard. Yeah, they've got some. That's interesting. That's good. That's a big endowment. But do you see a lot of those in here? No, you don't yet. So, this is still we're still in early stages of these institutions figuring out like what what do we what what is this Bitcoin thing? How is it different from any of the other 20,000 cryptocurrencies? And um and they're not allocating to it yet. So, those are the institutions that I'm talking about when we talk about the big big big boys. Those are the ones that have to start piling in on top on top of each other. Okay. Why does it matter if you have a Harvard that comes

in that is that is significant and I've seen that before. Um it's significant because if you go back to uh the 90s where you had this the portfolio manage that the CIO of the Yale endowment uh David Swenson and he was there and I I actually took an investment class from him uh when I was there and he was a young guy uh at the time and he kind of he blazed this path for endowments to go and buy uh things that were that were a little bit further out on the risk curve. curve to your typical investor.

So when you're an endowment typically they were they were buying uh you know stocks and bonds by and large um in different mixes from different sources. Okay. They were not doing things like private equity, hedge funds, arbitrage funds, convertible arbitrage funds like they were not they were not moving out on the risk of certainly not doing venture capital. Well, David started layering these things in and his returns were exploding while everybody else is looking around saying, "Well, how is yield doing so well?" And they start looking at their portfolio like, "Oh my god, we've got to get in this stuff."

And then everybody started piling in. So now you've got the back end of that trade where you've got these endowments who are sitting on decades of uh private equity that they're trying to unload because there's no liquidity in them. Um, and so they're selling them for uh not pennies on the dollar, but at a discount on some of them, because they need access to cash. So now you're going to see the same sort of thing that's happening here with Bitcoin slowly. I don't expect it to happen overnight, but it takes time. Uh, I actually gave a a keynote out in Prague uh about this at the Prague Bitcoin conference, and it was all about the institutions coming in. And the problem is John is they have these steps they

have to go through like there is it's structurally slow for a reason but they have to go through committees and they've got to go through approvals and they've got to you know they've got to write papers on them. It takes so long. It doesn't like this is not the kind of thing where you and I are sitting home at night after eating dinner with our with our wives and you just sit down on the computer like I'm going to buy some Bitcoin and you just click a button and boom, it's done. This is like you've got an analyst who presents it to portfolio manager. The portfolio manager takes weeks or months to even buy into it.

Does his own research realize, oh yeah, Bitcoin is a little bit different. Maybe we should buy some of this. And then he's got to tell his uh chief investment officer, chief investment officer, they got to sit down in front of a committee that you know investment committee and the investment committee's got to all vet it and they've got to vote on it. And then it goes through the general counsel like what's the risks? What are the personal risks? And then you get to the the yeah the personal, you know, reputational risk of buying it. And that is a big hurdle because if you're looking around, nobody else owns it, and you go out on this curve and you own it and then the thing has one of its 80% drops, you lose your job. I mean, you're putting yourself out there. What's the upside to that? rather than just stay in

that stream to keep getting paid, you know, pretty handsomely to just perform, not wildly outperform, just perform. And so, uh, that's a and that's a big deal for these institutions. You've got people sitting in these seats for many years that they don't want to give up that seat. So, they're going to be very careful and they're going to be a little bit more riskaverse. So what you're seeing here is very interesting in that now you've got JP Morgan, Morgan Stanley, BlackRock, Fidelity, you've got these big companies, you know, Bitwise is all about these uh these kinds of uh instruments, these securities in their ETFs. And so now you've got these uh these huge sellside institutions that

are saying it's okay. Come on in the water. It's okay. And even Vanguard who initially absolutely vehemently just refused to offer the access to bit to to IBIT or Fidelity or FBTC to their their own clients. Absolutely refused. Well, a year ago, well, since then, you know, Bitcoin's up about 150% and that CEO is gone. A new CEO has brought in who helped uh structure some of these uh these ETFs. he understands them and suddenly lo and behold they announce we're considering giving access to our client soon. We it's there there it's becoming a risk to not have access to

not have any allocation to it and that's what the world is recognizing. So to answer your question, we're just beginning and no, I don't think that this is just going to this is going to cause this blowoff top, but I do think that uh this is a structural shift that's very significant and it will last a long time. It doesn't mean that we're not going to have draw downs. It doesn't mean that that Bitcoin won't still react like a risk asset like it has for years, but it does mean that that understanding is changing slowly, but it's changing.

And that as it's brought into this conversation conversation with gold, that's going to change the way that it it correlates to the risk assets of the world. And that's that's a pretty significant change. If long meetings and judgmental bankers are your thing, Nexo is probably not. Nexo is a premier wealth platform built for people who value their time and money. It's built for people who have idle cash lying around and want it to grow fast. Whether it's Bitcoin, Ethereum, or even Forex pegged assets like USDT or USDC, Dexo offers up to 14% annual interest and access to cryptobacked credit in under 24 hours. Your assets need a platform built for growth. Join Nexo. Why do

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I really appreciate the the thoughtful analysis on that and framing for our audience um how a lot of institutions are thinking about this and letting us know your views on this. Um I did want to ask about that like Paul Tudtor Jones went on CNBC and said he's calling for a blowoff top in Q4. Um I want to get your thoughts on Q4. JP Morgan uh in their writing about the debasement trade think that said that they think it could push Bitcoin to 165K this year. Um and like I said Paul Jones is calling for sort of a blowoff top. I'm curious what your mindset is going into Q4. I know you don't like short-term predictions but do you see Bitcoin at 150K at 200K? Do you think 165 makes sense? What are your thoughts for for Q4 as we see this sort of adoption and new wave of capital

start to come in for the first time? Yeah. So, uh, I look at, so first of all, I've been talking about Bitcoin getting to 150 to 180 for a long time, for years here, and and I figured sometime in the fall. I thought it was going to hit 150 to 180 sometime in November. I guess it's not out of the question here. You know, I mean, Josh Mann thinks it might go to 444. I don't I don't know about that. But um I do think that we're going to see an expansion uh in in the price of Bitcoin here because we're seeing an expansion in liquidity. And what's happening is you've got the central banks are easing.

You've got you've got the the Fed is now easing and you've got some factors here that are going to cause it to continue to ease. You've got China who is expanding on their uh liquidity and their money supply and that is going to start feeding into risk assets around the world. Japan has been uh if you're watching Japan, they have a new prime minister who was just elected that is uh akin to Trump. And the thought there is that liquidity is not going to stop in Japan. And even though they are in a precarious position of being the largest buyer of their own bonds, the largest owner of their own bonds, having done yield curve control for many years here,

and now sitting at a a spot where their yields have spiked up significantly, and um and so what's going to happen there? Well, the the idea is that the thought is that look, this is the this has been the carry trade for the world where you can borrow cheap, borrow yen cheap and turn around and buy risk assets around the world. It's just access to capital at on on the cheap. And the you know the think is that that's going to continue now with with her in place. So that's a big deal. Another big deal is that, you know, as we've seen the the just this

dir of volatility in both stocks and bonds recently, that's that means there's access to more capital because it requires less collateral to borrow against. So that's an expansion of liquidity. If you then I I talk about Michael Howell a lot uh crossber capital. He's got a great um liquidity uh measure that he likes to uh look at that I think is is probably the best the best that I have access to in the world. I I really uh I really um you know uh respect the work he's done. I don't know exactly what his calculations are, but I know what's what's in what's in the pot.

And uh and so things like bond liquidity, bond uh volatility, uh you know, shadow banking, meaning hedge fund and private capital, uh you know, um the central bank, the QE, QT, like all that stuff is in there. And that's really the measure beyond M2. M2 is one like big factor in it. But then overarching all of that is just we're a world built on debt, on leverage, on borrowing. And that's what's going to keep driving this. And I believe that that's going to keep expanding through this year and into next year. And uh and that cycle of liquidity is just continuing up here.

And it's going to probably top out sometime next year. So the answer is I have high degree of confidence that we're going to continue to expand. Do we have a blowoff top? Well, it would seem that that's where the market wants to go here. Uh just if you look at the emotion of the stocks, if you look at the psychology of them, we just keep reaching new highs. It feels like we're going to get to the point here of just absolute ridiculous FOMO across the board. I don't know when that is or, you know, how that plays out for Bitcoin, but it it just feels like that. It feels like I feel the the the echo of 1998 1999 here where you had all those internet stocks and um you know they were it was just madness. You're too

young to remember this but it was just you would buy you know you would buy an Amazon or a Google it would be up 20 30 40% in a day. You're just like wow do I sell it? What do I do? And then it's up another 40% the next day. You're like oh my god like what is like this is just insane. um especially the smaller ones, not the bigger ones like those. But so the problem with the market is that the breath is very very consolidated with the AI um you know the MAG7s. It's uh it's a that takes up the the vast majority of the of the index now and it's that's um that's a little bit worrisome.

uh and you know but the if you look at the indicators of what's going on and where the Fed is right now which is a big that's they're a big driver of liquidity I just expect liquidity to expand going into this this quarter and uh and so I would I'm continue to be long I have hedges on in case we have some sort of black swan event we can do you know but um by and large we are we are still invested. >> So, one of the first guests I had on my Milk Road Macro podcast was Michael How.

So, if anybody missed that episode, I I suggest you go back and check it out. Um, but I think that's a great place to start from is that liquidity point of view and then this idea of concentration. I had Jordi Visser on last week and he talked about that concentration in AI as well. Um, so yeah, just again a lot of really helpful perspective on that. Um, I want to ask your thoughts on something here. Uh, the Bitcoin bull run that we've been in this time has felt much different in many ways than prior bull runs. there's been a lot less euphoria and I think a lot of people, especially viewers of this channel, people who are in our Milk Road Pro community, um, crypto investors in general are feeling like we've been in a steady grind, but we haven't really had much of like a big massive breakout. How

are you thinking about this change in dynamics? How are you thinking about this in terms of like how the market is treating this asset class differently? Is this a sign that it's maturing or are the big returns gone from Bitcoin and crypto and those days are kind of behind us? How do you think about this changing market dynamic we've seen? >> Yeah. So, there's a few things to unpack there. Um, first of all, the you the the old thinking or the the um the traditional thinking on Bitcoin, traditional, it's only been around 15 16 years, but was that as you get through these market cycles, these four-ear cycles, they were attached to the uh the supply. So um the mining and and the reward and and the having every four

years well that that is absolutely I I believe that is absolutely the huge driver beginning in the in the first few cycles. But now as we get along here and that uh that reward becomes less and less uh important for just the number of bitcoin that are out there um and just as a percentage of the the new supply it it just becomes it's not as important. What is important is the hash rate and the cost to actually mine these things.

number one access to energy too. Um which they're finding all way all kinds of ways to um to mine for just pennies um and you know um per kilowatt. So that's one thing, but really the big driver of this of this latest cycle I think is is getting much much more closely tied to what we just talked about the liquidity and global liquidity and expansion and contraction of that liquidity and money supply. And so uh and you're seeing that kind of uh in real time on a lag. What do I mean by that? Well, when you look at somebody like Michael Howell's work, he'll plot the liquidity and then he'll plot

Bitcoin on a 10 or 12 week lag behind it because it takes that long for it to for that liquidity to um to to see itself to see the liquidity driver in the price of Bitcoin or in the price of gold. So, it's a little bit different than than securities. So, that's one thing. Um, the other thing is if you look back at uh at the four-year cycle, what's interesting is that it matches up perfectly with our presidential cycle. And this last president presidential cycle was extremely important. And what I mean by that is that we had a quite an antagonistic

u cabinet uh previously and and and administration as a whole uh through Biden and his administration and particularly uh the psychopath out of Massachusetts Elizabeth Warren um and her anti-crypto army. Um, I can't imagine a worse senator in the in, you know, for the citizens of of Massachusetts, but they keep electing her for God knows what reason. Um, you know, just lining her pocket every year in her insider trades. But anyways, so the interesting thing is that when we had that election, you could see the run-up to it and people realized that Trump was really gaining momentum here

that the mainstream media was completely wrong, that he had a lot of support and suddenly that quiet support he has was getting more and more emboldened. Flash forward today, it's very emboldened. But the the the thing is when when I when I launched my fund, the Bitcoin Opportunity Fund, John, which was right before the election, it was in 2023. And we we experienced firsthand what would what became known as chokepoint 2.0. And for your viewers who don't know what that is, chokepoint 1.0 under the under the Obama administration went after uh industries that they didn't like. um you know, things like um firearms, guns and ammo, pornography,

you know, and what they said was if you're a bank and you're doing business with these uh with these companies, with these outfits, that we're going to come after you. And so that was known as choke point 2.0. It was pretty much uh behind the scenes and you know they they they just choked off all of these uh all of these businesses by the access to actual capital through the banks. If you don't have bank capital, bank access, then you know well no surprise that something like Silk Road would uh you know pop up. But flash forward to the Biden administration and and Elizabeth Warren decided she didn't like cryptos.

And so she was going to go after the crypto companies, the crypto bros. And so any business and any bank that was doing business with them was going to be uh scrutinized and, you know, possibly have these long drawn out uh audits or whatever it may be, sanctions, quiet sanctions. And so um and we experienced it. So when we were raising our fund, we we call it the Bitcoin Opportunity Fund and so and it's Delaware, you know, um it was it was formed in Delaware. Uh so we're a US-based company under Delaware rules and operating in Nevada under Nevada rules and all above board, all you know, we did all registrations with the SEC

above board. Everything's everything's laid out to see, but because we had Bitcoin in the name of our fund, just we're just a traditional hedge fund investing in Bitcoin companies, you know, and but banks refused to send wires. They uh they would uh delay them. They debanked a couple of people who were trying to send money to us. Um and then they just cancel them. They would just cancel wires that were sent. And so, uh, flip flip to the 2024 election when, you know, we get a new administration and suddenly all of that the the SAB 121 was repealed fully. you know, if for if

for going back to the the people who don't know what that is, uh, a little bit more just a little bit deeper here, John, SAB 121 was when the when the SEC did an endzone run around Congress and decide they're going to do an accounting bulletin that basically said if you if you're a bank and you're uh and you're doing business with cryptos, uh you're you're holding uh Bitcoin for a customer, then you have to put in your balance sheet as a as a liability. And it was just it was messy. And so nobody wanted to do business with uh with any crypto companies, any Bitcoin companies.

And so uh Congress got angry because they saw it as an endzone run. They're like, you can't just do a bulletin. Like this needs to be legislative. So they overturned it, SAB 121 through a vote. It got to Biden's desk and he vetoed that overturn and said, "No, we're going to keep it in place." Well, one of the first things that that Trump did when he came in is he said, "Well, we're going to undo that veto. We put in a new uh we put in a new commission, the SEC, and they issued something called SAB 122, which overturned 121, and said that it's okay for banks to start doing business."

So, why do you think it's so is it surprising now that you have JP Morgan and Morgan Stanley suddenly saying, "Maybe you should own some of these." Oh, and by the way, we're going to be offering this through our platforms. Come on. So, um, but we've had one wire that had trouble in the last, you know, since the election and we we we launched a new fund, uh, Bitcoin Opportunity Fund 2, and we've had one wire that was that we had trouble with, and it was coming out of Canada, and so it's, uh, it's it's completely switched, and it's and so that's been a big deal. Yeah.

>> I really appreciate the history lesson around this. I I think we're not going to have time to get to all the questions that I I have for you today. Um but I just I really appreciate you sharing the history and context on these things. I do want to ask one question though about the Bitcoin opportunity fund. Um because you know shifting away from Bitcoin the asset there is a large ecosystem uh around Bitcoin and you guys do investment in public and private companies. I would just like to know a little bit about your work with the Bitcoin opportunity fund. What has you excited about the Bitcoin ecosystem? Right? Because a lot of people will say Bitcoin is just a way to like send coins to one another and there's not much else you can do with it. What are you seeing in the Bitcoin ecosystem that's got you

excited as an investor and what innovations are you seeing coming out of the Bitcoin ecosystem? >> Yeah, so um well, yeah, I appreciate you uh you asking about this. The Bitcoin opportunity fund is it's a it's just it's a traditional hedge fund. Uh and uh and we invest in only Bitcoin Bitcoin adjacent companies and or uh projects and so and we do early stage, late stage, uh we do uh private and public. It doesn't matter wherever we we see the opportunity, but our focus, our core focus is on more developed companies, and we like to say they're real companies with real revenues and real profits. And so we do a lot of public investments. Um we've done quite a bit of the uh of these new Bitcoin treasury

investments. Uh we've been in mining, we've been in energy. Um and so we do some venture capital. uh a few here and there, but by and large we're really focused on on that core. And the reason for that is that, you know, we're a hedge fund that's got a seven to 10 year lifespan. Um, and so we want to have companies that are going to match that duration. And you know, this is a this is an emerging technology and it's taking a long time for these early stage companies to get up and going and really get traction with their technologies and their innovations around Bitcoin. And I just think that that that that cycle for them is long. It's more like 12, 15, 17

years. It doesn't really match that, you know, um that 7 to 10 year um fund, you know. So you want the investment fund and that life of that investment fund to the duration to match your investment. So we feel like we can match our investments better here. But one of the things that's important, John, is that we can do and we do a lot of is we can manage the risk around these investments. And so our objective isn't to beat Bitcoin, is to beat Bitcoin on a riskadjusted basis. So to to manage that volatility. So, if you do need access to funds, you're you're exposed to Bitcoin along the way, but you're less exposed to those violent drawdowns that we we

see. Now, we do have some massive uh gains and retreats in some of these treasury companies. And that's just part of the game that you'll have markups and markdowns because you're you you're doing these private investments that haven't come to market yet. Um, but because we have access to to those private deals, the pipes, what we call them, um, is we get them at a a better price because we're taking the risk of being a liquid until it comes to market.

So, we get them at a at a price that's much closer to one MNAV rather than having to wait to buy them in the market when they're 2, three, four, five, six, or ridiculous MNAV. Uh, you know, so, um, but that's one of the things that we're really excited about. I think there's a there's um there's a great amount of of opportunity there and we're seeing companies like in primarily Micro Strategy weighted into this uh into this world and uh and through some you know highly intelligent financial engineering uh they've found ways to access liquidity and really what they they in the beginning they were just kind of

arbitrageing the capital markets and and the fiat system to borrow um dollars. The debasement the de the ultimate debasing the the you know debasement trade is to be borrowing these things and buying Bitcoin and gold. Um, but buying Bitcoin is the ultimate one where you're able to uh engineer where you can issue preferred and issue and and offer a super attractive 8 10% yield and pay for that yield along the way with that tremendous growth in Bitcoin. And so, um, that's that's been that's been a that's been a development that we think

is going to continue for a long time. We think this has a long runway. Now that said, not for everybody. You know, there are some companies out there that we that are that I don't have as much confidence in as other companies. And I think that it's going to consolidate down to a handful of of really successful um companies on that are that are public companies that are able to continue this capital markets access and arbitrage to to fiat to to the US dollar. Um, I can't say much about Strive, uh, because I just joined on the board of directors and I have to be careful about that.

But, uh, you know, I'm excited about that. I'm excited about being part of that company. And the things that we're talking about, we're we're excited about. We think that there's a there's a long road ahead. Um, you know, um, again, I can't talk about the the merger that we just announced. Um, but, you know, this these are things that that I think are going to continue down the road. You're going to see more consolidation and you're going to see this continued access to capital. There will be volatility need full stop. I do not expect to go through this this the rest of this cycle or into the next one without tremendous volatility. Um I do expect that but that brings opportunity and that's that's really what our fund is is looking for

is those opportunities to take advantage of. I I want to end this conversation um with coming back to opportunity and hope and a question about financial nihilism. Uh I I really appreciate this perspective that you're bringing. You know, we talked about the debasement trade and how this is being driven by people losing faith and confidence in the bond market. We talked about operation chokepoint 2.0 and how this oppressive regulatory regime has been kind of, you know, choking this industry for a long time and how that's changed. And you know, I asked you about, you know, our Milk Road Pro community and other crypto investors feeling sort of like like uh a little bit hopeless, I think, and that's where this idea of financial nihilism has come from. People of my generation and a lot of I think crypto investors are are struggling with

this a lot. Um, and I'd love for you to just, you know, just sort of tell us a little bit about why in the face of all of this and these like, you know, big international level problems in the financial ecosystem. Why should crypto investors, Bitcoin investors feel hopeful about their futures, their financial futures and yeah, just talk a little bit more about that opportunity that that Bitcoin brings and and what that offers to investors. >> Yeah, so if you you know, um, it is it is troubling. It's super troubling. Uh I wrote a piece about the separation of wealth in the United States and how we're starting to look more like an emerging market u you know like a a a Chile or Brazil or an Argentina with a

separation of wealth in our country. There's a reason for that. The reason is the Cantalon effect. The Cantalon effect is where whoever's closest to the money spiggot where they print the money they actually print the money. Whoever's closest to that benefits the most. And there's no surprise. There's no there's no secret around that. That's why the bankers and that's why the politicians, that's why these guys are getting stinking rich and they're their wealth is consolidating at the top. So the top 1%, you know, uh controls a massive uh percentage of the assets in this nation. And so if you don't own assets, you're getting left behind. Why? Because of that debasement of the currency. So you can't just sit and you the problem is wages aren't keeping up with inflation.

they lag and then when they finally do catch up, you know, everything's so expensive. Like, how are you going to buy a house? How are you going to buy that car? How are you going to pay for that car that you bought that suddenly is like the the payments on it are just crushing you because you're paying for the the the percentage of your discretionary income going to goods that you need, the food and clothing and shelter is it's growing and it's it's taking away your ability to do anything else. no less safe. And so it's a it's a troubling problem that we have. And for the first time, we have this asset that you have access to with your phone. Just pick up your phone and

you can log into a a strike or, you know, another exchange and just go buy some. It doesn't you could buy $10 worth, $5 worth. You could just do it every single day or week or month or whatever you can put away. And suddenly you have this asset that cannot be debased like the US dollar, like the yen, like the euro. You you can buy this asset and what it's not going up in value. It's that everything else is going down in value around it. And so even if even houses are going down in value against Bitcoin, tremendous rate, at at a tremendous rate. And so owning Bitcoin in particular, the fact that it just cannot be debased, that is written

in the code that is there's only going to be 21 million of these ever, that there are over 60 million millionaires in the world that would eventually love to have a full Bitcoin themselves, but they can't and they won't. And you have access to it now. And the access to it is really around the knowledge. And what's so what what gives me so much hope and so much um optimism and confidence is that for the first time you've got regular people who are on outside Wall Street and I've straddled both worlds now for years and I see the people on Wall Street who are just completely oblivious or they just shut it down or just don't want to think about it because this is not something that they have benefited from and they've benefited from that old system

for so many years. Why would they consider something new or help it unless there was tremendous opportunity for gains themselves there? And so, but the the little guy, the individual investor, the retail guy who's sitting at home looking at his bills and saying, "My god, if I if I could if I just had something that would just that I could put away and just not worry about for the next 10 years, and it would I could save in it that won't melt away on me and it's not illquid like a house or doesn't require payments or mortgages or taxes like a house. If I just had something like that, then maybe I could get out of this hole. And we have that now. We have it in Bitcoin. And they they have not paid attention to it.

They're just now waking up to it. Just now waking up to the fact that it's a separate trade than the Mag 7. This is the debasement trade. This is something that you can put your money away like you can in gold. Put it in a vault and just leave it there. You know, if you were owning gold for the last five years, now you're happy because you just left it there. If you were owning Bitcoin for the last five years, you're ecstatic. And so, and I think that that's going to continue. And it's not that you're getting rich. It's like I said um yesterday uh on on the the macro show is that you're just it's it's a way for you not to get poor slowly. you can

have you can have tremendous gains in it in the future for sure especially if the system falls apart. It's not something I wish for. Uh but if we have a period of insane inflation, I don't think that the dollar is going to hyperinflate anytime soon, but if we have insane inflation of 15 20% 25%, you're you're going to be okay if you have some Bitcoin. you know, that's that's the ultimate uh that's that's the hope and that's why I think that you know uh that you should have you should be optimistic if you're around your age um and you're understanding this and guys my age are sitting around on Wall Street and having no clue what's going on yet. That's that's that's a positive

thing in my mind. >> James, that was beautiful. It made me want to stand up and salute. Uh I really appreciate you coming on the show today. I think our audience is going to really enjoy this conversation. Uh, I have a lot of other questions we're not going to get to today, but I got to get you on our macro show to talk about that stuff over there. Uh, but for now, just thanks for being here. Where can we send people to find more of you and your work online? >> Yeah. So, obviously, I have my newsletter that's, uh, the information that it's, uh, on Substack, and you can just find it, jameslavish.com. And uh if you're a credit investor uh and you are interested in uh investing in the Bitcoin ecosystem and want to broaden out your u investments in Bitcoin, then you can just find us at

bitcoin opportunity.fund. Uh just drop us a line. We're happy to get uh on the phone with you and talk through whether or not we'd be appropriate for you if we think that uh you would uh be a good limited partner. So um pretty easy. >> Thanks so much for being here, James. I really enjoyed the conversation. And I hope we can have you back again soon. >> I would look forward to it and I I'll come on your macro show at some point soon. >> I'm going to hold you to that. Absolutely. Great. Uh well, thank you, James, and uh thank you all for joining us. I hope that you all learned a lot today and uh just remember, stay safe, stay bullish, stay educated, and we will see you on the next episode of the Milkro Show. Thank you everyone. Bye.

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