William Quigley on the Bitcoin cycle and digital asset treasuries

Transcript

as all of these people are rushing to raise money to do dats that make no freaking sense. I think uh they're going to uh lag. GM. Good morning. Welcome to the Milkro Show, the daily crypto show where we make sense of markets or at least laugh at them. I'm your host Jay Hamilton. It's Tuesday, September the 23rd. Myself and the Milkro team are currently in Croatia on our annual retreat. we are cooking so that we can all dominate the coming bull run. So this conversation was recorded last week on September 17th. Today we are joined by the one and only William Quigley, co-founder of Tether, the world's largest stablecoin, also co-founder of

WAX Blockchain and a seasoned tech investor with over 40 years of experience. Today we're going to talk about the Bitcoin cycle pattern is broken. William's going to explain why the crypto market isn't following pattern and what it means for his decision-making and for your portfolio. He's also going to talk William's buying despite the pattern breaking. He is still bullish. He still remains bullish, but he's also planning for a 75% crash when the bare market comes. So, he's going to talk about how to balance riskreward and how to think about exit strategy. And finally, and you got to stick around to the end to hear this part of the convo because it's probably the best part, is William explains why he is so skeptical of DATs and flat out

says that nobody should invest in DATs. So, tune in till the end to hear that. Before we jump in, wherever you are listening, please do me a quick favor. Give us a like, a follow, a subscribe. It really helps the show in a very meaningful way. Today's episode is brought to you by Figure Markets. Grow your cash like a bank. No lockups, just real returns. It's also brought to you by Nexo, the platform that grows your crypto without locking it away. With that, William, welcome back to the Milk Road Show. >> Hey, glad to be here again.

>> Always a pleasure to have you. I almost hesitate to start with this question because we were just talking backstage about how much you hate this question right now. Uh, but high level, having you on the show in a few months, how are you feeling about, let's let's not go crypto markets. Let's zoom out. How are you feeling about the markets in general, where we're at right now in this cycle as we look into Q4? >> Uh, well, it's disappointing in a way. I've been uh getting over the disappointment since April. April was when we really broke from the um the historical pattern. Had we been following historical post happenings, uh by April we would have been at I

don't know 150 to $200,000 Bitcoin on our way to 3 325,000 maybe uh before we did the inevitable reverse, you know, 18 months post to happening. That's been sort of the trend. And um it really broke uh from that pattern in April. And once that happened, no one knew. And anyone who, you know, says they know, don't trust them. We, no one knows at this point. Uh, we didn't necessarily know for sure for certain before. But if you're following a pattern and it looks like you're keeping into that pattern, I guess you can take some sort of comfort in all right, looks like this is how

it's going to go. So uh August, September historically not great months anyway particularly post happenings and uh I think I kind of thought we would be in a little trading zone which we have been the surprisingly right the stock market's been holding up really well S&P up uh not 20 maybe 18% for the year which is incredible given that it was down almost 20% Right? Remember during the uh the tariff scare now. Bitcoin is up 100% in the past year, which is good, right? It's up a lot. But at least historically, people

like us did not get involved with crypto to double your money, right? That's not what this story was about. And um maybe that will be as we get into these multi-trillion dollar valuations which of course become harder and harder to move maybe that is um going to be sort of what we need to expect. But uh by call it November the um the last remnants of the what historically had been the post havening run will be over. And then I think what everybody should be focused on, I certainly am focused on is um forget

about like riding things up. Start worrying about, you know, is this thing going to retreat. There's no reason to think if Bitcoin has broke its historical pattern that it would go back to its historical pattern in 2026, which is a steep drop. On the other hand, there's no reason to think it wouldn't. We just don't know. And uh I think uh uh for those of us who have been around a long time, those multi-year bare markets are not fun.

>> And so I don't want to be part of that, you know. Uh so uh and you know there's there's because it's guesswork. There's so many uh arguments that would say Bitcoin will actually do quite well in 2026. And I can talk all about those things. I can equally talk all about why it won't. So, we really just don't know. One thing I'm pretty confident of is that if Wall Street gets spooked, if the markets were to retreat, if you know we had some kind of um recession, the market pulled back a lot, uh crypto would suffer. uh I don't see a scenario where we have a um a slowdown in the

broader financial markets and crypto goes unscathed. So that is a risk right uh that we have to think about. Now I don't know anything any more than anybody else about the market. Uh so far things have been going great. Like I said up u maybe a little under 20% for the year. Fantastic. But let's also remember these returns in the US market are like elevated by a tiny number of stocks. You know, you've got maybe 10 stocks that have really pushed it up and then everything else is either flat or down slightly. I I want to talk a little bit about uh exit strategy and exit planning uh because it is it is really

important and as you said we are getting towards based upon historical patterns November would be the top. Um now as you said historical patterns are broken so it it might not be the top in November but h how do you think about that? How do you plan for that when the historical patterns are broken? H how do you think about the way that you are going to exit and when you're going to exit uh when when you don't have that that pattern to look at and to hold on to? >> So, I've I've only spent like five years thinking about this. So, uh like daily.

I guess I would say this. It of course it depends so much on how exposed you are to crypto. So, if I had what I would consider a minimum level of exposure, so uh and most people probably think this is conservative, but maybe 2% of my net assets, uh 5% my net liquid asset, something like that. But, but let's go with 2% or whatever. If I had that minimal exposure, um I would not pay that much attention.

If I had to ride through a downturn for a couple of years, I'd say whatever. And the reason is this. The greatest risk when you are involved in a investment that has uh a very likely a very long trajectory, but that's got volatility along the way. The greatest risk you have is that you exit and you never get back in. And that risk is so great in my experience. Um, I've never exited, you know, I just have held my crypto. Could I have done amazing if I had sold at the lows and, you know, or sold at the

highs, bought back at the lows? Of course. But I never knew what the lows were and I never knew what the highs were. So, when people talk to me, as they do all the time, and they say, um, it gets kind of annoying sometimes, too. Oh, uh, Bitcoin dropped 10 15%. Should I sell? It's like, well, it yes, if you literally are going to miss your rent because you needed that money. But, you shouldn't have had that in there if you were in that situation. But no, you should not if it's just money that's being put for in the speculative bucket. So now let's say you're not in that situation. Let's say

you are um overexposed, right? So whatever you've got half of your wealth, which a lot of crypto people do, >> half your wealth, >> that would be most of the listeners of this show would have a majority of their wealth. >> Myself included. Right. So I'm in this >> me too. uh uh to a disgusting degree my wealth is concentrated in crypto. So in that case, now I'm older than almost all of your audience, but here's what I would say. You must always have I hear this stupid thing like six months or whatever of cash. I think that's [ __ ] For me, I would want two years of living uh a cash balance so that if I lost my job, I could survive. Maybe I

cut back some, but I could survive for two years, right? So, you must always have that. You should never have so much of your wealth invested in anything such that if it dropped, you know, nothing ever goes to zero, but if it dropped 75%, which is a reality in crypto, you would be forced into a position where you would have to sell at that low. Now I have been investor for a long time and I've put myself in those terrible positions where my companies or I had to liquidate at a point where I knew the prices were artificially low. I knew they were going to come back, but I

could no longer tolerate it going any lower because then I'd be putting my runway at risk. And I I did that a few times and then I said never again. if you can't tolerate now in in the S&P I would say 25% cuz it's not going to drop almost ever 50%. But if you can't drop if if the S&P were to drop 25% and you would be forced to sell then you have too much exposure in the S&P in crypto I'd probably say it'd be 75% because historically it's done that. You whatever you would need to sell if it did that you should have that money out now. And then here's my advice. So this goes to any investment you ever do. It's extremely good advice. It's this. Pick a

price at which you find it attractive to invest. Whatever that is, right? Pick that price. Uh for Bitcoin, maybe it was 105,000, whatever. At that price, you're a buyer. But you also need at the same time to pick a price that you would take some money off the table. Now you might say, uh, I'm not going to do it that way. I'm just going to wait five years. Okay, whatever. You can do a timebased thing. But this is a very simple discipline that I won't call them traders, but investors do. As a VC, whenever I made an investment, I had in the back of my mind what I thought would be an

attractive and realistic exit. If I got that or had the ability to capture that, I would take it. Sometimes you, it turns out you revise it, right? You're going, "Whoa, this thing can go public. This is a bigger thing." You can revise it upward. Sure, but have that. And uh I think in crypto it's very important if you are you know under the age of 40 you have a lot of flexibility like a ton of flexibility because you can pretty much recover from any financial setback. Even at 50 you can probably do that right now. If you're 60 plus I you know you got to be much more cautious. So, whoever is in crypto right now, think

about it going down 75%, which is not a prediction, but it's just it's a possibility. And how would you would you have wanted to respond if you knew that in advance, right? Like, oh, it's going to pull back a lot. You don't know when it's going to recover, but you're like, it's going to be pulling back. How much would you just get out? you know, if you're in the US in particular, you need to factor in the uh effect of taxes, right? So, depending on which state you're living in, depending on, you know, hopefully it's a long-term capital gain, but you're going to have a significant percent of that transaction, whatever the proceeds are, is going to disappear. You've got to

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bearish sort of perspective right now, which I don't think is necessarily your intention or your take. I think that you're you're you're more sort of painting the picture of the possibility. What is your your outlook now that you know past patterns broke in April? Are you still feeling bullish? I mean everybody to you know consensus on the show is certainly that the macro setup is very strong. Uh we just had rate cuts you know projecting even more rate cuts this year around the world. Central banks are you know printing money and injecting them into the system. It how are you feeling? You are you feeling

bullish going into Q4 in 2026? What's what's your take? you know, uh, whatever anybody says, it's irrelevant, uh, compared to what are they doing with their money, right? So, somebody's saying, "I'm really really concerned about the market, but they're all long." Well, okay. But that tells me you're you're pretty freaking bullish based on what I'm doing today. I'm extremely bullish because uh I am not just maintaining my exposure, I'm increasing it in different tokens. So I'm very bullish. But this is uh uh something I explain to my associates, younger guys.

um what you said about oh if I'm planning on uh possible possible scenarios you know is that bearish no more than checking your parachute is like assuming you're going to die. It's like before it's a it's a requirement before you make an investment. No one makes an investment to keep it there forever. They make the investment to make money. Well, the way you make money ultimately is you sell the the the the asset once it gets to a price you like. I find it really difficult to buy something with no point of view about

what a win would be. You know, that to me is a no no. That to me is a is an amateur. You're an amateur investor if I say, "Oh, you know, I'm gonna invest this money." Well, uh, at what price would you say this is a win? I don't know. I just want it to go up. But that how do you how do you make any decision? You have it's it's like going on a trip. You have a destination, right? You have a route and a destination. Well, if you don't have a destination, where are you headed and when is it going to end? That's that's the problem with um investors who don't have an exit um idea, which of course again it doesn't mean that they're going to get

that, but it it's really useful to do this exercise because it forces you to think more closely about the investment like, oh, I want whatever, you know, it's a stock investment. I want a 25x return. Oh, well, that's probably going to require an IPO. Yeah. Okay. Since it's going to require an IPO, you're talking seven to 10 years of holding if it's a startup, right, before it goes public. Oh, no. I wanted to get out in two years. Well, you don't get out in two years in a startup if you're going public, right? That can only happen from an exit or from an acquisition. Who's going to buy it? Who would be the likely buyers? You know, so that's the reason it's useful to do this exercise. If you

are uh it doesn't matter if this is stocks or or crypto or real estate, you know, it's it's the same thing. If you're deploying capital to make a return, what I just laid out is a good practice. >> It's so true. It is simple but yet profound advice because quite honestly, not a lot of people take the time. >> And you have to have this, by the way. You have to have this one too on the when do I get back in. That is the one that all of your listeners and myself, we've done it. We've watched something go down. We would have been delighted to get in at that price when it was trading up here, but now we're wondering wondering and wondering and then it just goes boop boop and it's like, dude, have

an entry point, right? Have a point where you're like at that price. Now, if the situation has changed, that's fine. But if everything is kind of as it was and uh you're like, "Okay, you know, this is this is a discount to what I would have paid before," then get some exposure back in. >> I've got to ask about something that you said because if I don't ask, my audience is going to yell at me for not asking. You said you're buying right now, buying tokens. What are you buying? >> Yeah, I knew I knew you were going to ask.

Uh, let me Yeah, I'll tell you what. Next time we talk, I'll tell you what I'm buying because I'm buying now. So, I'd prefer, you know, one to be fair, >> I have no magic information, right? >> So, just because I'm buying it, I could lose money. I don't know. As you know, I don't like to shill, right? So, uh I feel like if I mention what I'm buy, it's like, oh, like I t I typically will mention two things. the two big boys, Ethereum and Bitcoin, I'll say, "Oh, yeah, I bought some more." Or, you know, of one or the other. But the other things are so easy to manipulate.

>> That is so small. >> Yeah. Yeah. And uh there's just so many shills. I get criticized, by the way. I get criticized for never making a specific investment recommendation. >> You should be respected for that. You should be respected for that. But instead you get criticized. >> I do. I do. And uh the reason I will do I will do it with Bitcoin, Ethereum, gold. I will do it for those things because I can't control the prices of those, right? So no one can say, "Oh, look what that guy's doing." But um with full disclosure that like you know I'm doing it too, right? So if I was selling I wouldn't be telling people you should

be buying because I think that's also like shitty. But I also hate the idea of I say I'm doing something but tomorrow I change my mind and then I do the opposite and then once again people So the far better way to do it is to talk about like your objectives the risks I if I haven't said this before I'll say it now to your audience. Don't there's there's a question I can't [ __ ] stand I can't stand when people ask me this which is should I buy fill in the blank? Should I buy Nvidia? Should I buy, you know, Palunteer? Should I buy Bitcoin?

Whatever. Um, I find it an obnoxious question. And the way I can most easily convey it is, what if I came up to you and I know nothing about you, maybe not your name, and I said to you, should I marry Susie? Now, what when I say that to people, most people say, "Well, that's an unfair question. Why?" I don't know. Are you married currently? Are you divorcing a good woman? No. Is is Suzy an alcoholic?

>> Do you have your financial house in order? You know, like like there's a lot of questions, right? >> Yeah. Well, it guys, it's the same thing. It's the same thing with investments. People of course over the years have said, "Should I buy X, Y, or Z?" Now, I I and I can't do this on TV, which is why I tell the people when I'm on TV, don't ask me this because I can't give the qualifications, but it's like, should I buy Bitcoin? Yeah, I think if you I have no other data. Yeah, but now let's do the qualifications. Are you going to do it on a credit card because you're broke? Don't buy it, >> right?

>> Do you have upcoming um you know, whatever student loan payments to make or are you struggling to get your your uh mortgage paid? Obviously, that [ __ ] matters, which is why we don't ask that question. We also don't know. Well, let's see. Should you buy Bitcoin? Um yeah, you should. You should get some exposure to crypto. Oh, dude. I'm all in in freaking Acme memecoin. All my Oh, well, in that case, maybe you shouldn't buy anymore, right? >> Yeah. >> So, this is this is why you you don't ask somebody that question. What you you do if you really are trying to figure stuff out, you can give them information. Hey, here's this company.

Here's how long it's been around. Here's what the founders do. Here's who their competition is. Here's their gross margins and so forth. What do you think the chances are of that company effectively competing against whatever Amazon? Oh, so that's a different question, right? You're not asking should I invest? >> It is such a uh has has a bigger lesson here which is that investing is not as simple as listening to one person taking that advice and going and acting on it.

Financial management is not that simple and you need to take those things very seriously and do your own research and think for yourself and as you said write down when you enter what is your sell target and what is your expectation and what's your plan and it's it sounds so lame to say these things because they're not like a hot tip that you can go use right now and I'll bet you a lot of people listening heard you say I'm not going to say the tokens and they because they're like, "Oh, this guy's not going to give me the the alpha I want, the easy. He's not going to give me the easy alpha." But if that's all you're looking for, you're you're actually you're probably not going to make it because you're you're you're not making informed

decisions. You're not thinking for yourself. Yeah. And you're not know going to know when to exit and you're not going to know how to make these you're not learning the skills, right? Like you got to develop the skills to be able to make these decisions on your own. And maybe you don't know how to make these decisions yet on your own. So, you do need some input and that's fine. Like we all we all have points in our life where we need to ask others and get input and help make these decisions, but you've got to be developing those on your own because otherwise, yeah, you're going to you're going to get wrecked, you're going to get conned, you're going to be exit liquidity, all these things. And yeah, it is it is interesting because like when you say that, I think a lot of

people think ah like I don't want to listen to William. He's not giving me the easy out. But at the same time, they should respect you more, right? They should be like, "Oh gosh, thank you." Somebody who's not just shilling, but is actually being considerate. So, it's it is it is >> it's so easy. It's so easy to manipulate people. I see it. I see the way, you know, it's like, "Hey, there's this really exciting company that I'm looking at. It's right out of Silicon Valley. They've got this amazing new technology that I think is going to revolutionize the blah blah blah industry." And, you know, people will lean in. No, I want to hear about this. But it's like, you know, dude, this this just a story.

>> Yeah. >> Yeah. It's got nothing to do with you. Uh over the 40 or so years I've been investing, I have become, god forbid, more of a liberal on this than what I would call like a libertarian in this sense. My view was always as a libertarian. Invest in whatever you want to invest in. Uh you know, whatever. Do what you want. It's your money. Blah blah blah. And yes, I still at a high level think you should be allowed to do that. Having said that, I don't think most people can do that. I've come to think that most people are not capable of fully uh evaluating an investment opportunity that suits them personally.

And as a result of that, I think most people probably should steer away from a lot of the specific hot stories that excite so many people all the time. >> You know, particularly things like whatever the hot stock is. A few years ago, it was a Tesla. You know, before that, whatever, Facebook and and and Google and whatnot. and now you know Nvidia and Micro Strategy and Piloter and all those um but uh the I've done a lot of work with people particularly young people where I've said all right let's let's look at these two companies and let's see which one would be a better investment that's a little bit

easier than just saying should I or shouldn't I which one do you think is better >> it takes a lot of training to actually do that in a way that's logical and probably is going to lead you to the right path. Um, funny enough, the biggest problem with most people as investors with their own money is they don't take enough risk. >> Okay? Like most time. So um particularly women and this is well documented women have a much um lower threshold for the amount of risk they want to accept or perceived risk I should say in the stock

market. So often if you look at their portfolio, you know, a generic 35year-old woman in a in a stable job, she is got a 401k or whatever, you know, a retirement account and uh she has 60% of her money in bonds. >> Bonds. >> Oh boy. >> And it's like you're probably not beating inflation or maybe you're just beating inflation. So this is a horrendous portfolio allocation because first of all she has 3540 years to recover from any downturn

>> and the power of compounding is insanely good, right? And it and it it corrects for all the sins we make. And so um this is a persistent problem I see. I think uh last week I was helping somebody a woman um with her portfolio and she by the way I kept telling her I'm criticizing your portfolio but for like a 33year-old girl to have like $2.5 million in liquid investable assets all self-made uh mostly because initially of crypto I'm freaking impressed right >> but she had heard from somebody that the

market was overheated. So, she for the last year, I guess, had put her money mostly in bonds. And I'm like, we are never going to have your money in bonds until you're freaking 60. Now, that may be controversial. I don't care. Even at the age of 60, um, when I was younger, the thought was when you turn 60, you put all your money in bonds. But if you are going to live for 20 more years, then you can survive a lot of ups and downs.

>> So you should not have it all in bonds. Basically saying, "Okay, I'm out. You know, I'm not going to earn anything anymore." So, um, a lot of young men have the I do have the opposite problem. They have more of a >> I was just going to say this. Yeah. >> Right. A very speculative problem. And it's like obviously you need a little bit more of a balance, right? like they're like what I can only earn 100% annually on th those investments. That's [ __ ] >> Not enough. Uh so uh the I do believe though if as a hard rule uh yeah I would say I would have zero exposure to bonds.

Zero exposure. I'm much older than 60. I don't have any exposure to bonds. None that I know of anyway. Maybe maybe somewhere in some account there is but nothing substantial. I don't have any exposure. I don't want bonds >> because my view is >> I can withstand a drop in the S&P for a number of years. So, uh I'd rather get the promise of the upside than the guarantee of a shitty return, right, with with with the bond.

>> Okay, I'm I'm going to shift us slightly. I'm tempted to actually continue this conversation, but I do want to touch on a few other things with you. I want to talk about DATs because uh they've been all the rage recently in crypto and you're you're skeptical of dats. Why are you skeptical? >> Yeah, absolutely. Um I am I am cursed with knowledge, right? That's the reason I'm skeptical. I am cursed with knowledge. Um it's hard for me in a way to even I I'm I've been trying to take the other side of the argument and say why are debts such an amazing investment opportunity right that I can do that poorly but the reason is very simple um

if you like a crypto right you like a crypto whatever that one is uh uh buy it get exposure to it what is the argument because you like a specific speific crypto for you to instead buy this intermediary company the stock and this intermediary company that has a management team which I know damn well you know nothing about that has decided they're going to be acquiring crypto and doing something with it again of which you know nothing about. you have no idea what they're going to do with it.

And um those those people are not doing that for free, right? They're getting compensated either through the you know salaries or or stock. So you are almost certainly going to be paying a multiple some some sort of premium to the underlying uh crypto that that company holds in its treasury. So if it if the if the crypto is trading at a dollar, you're probably buying that stock at the equivalent of a$110 per one of those cryptos. So what are you getting for that? Okay, what are you getting for that? Oh, I'm getting the leadership of the company, the management of the

company to to be the stewards of that particular crypto. All right. Well, what the hell do they know about the crypto that you don't know? Like really, name me any crypto? What does some random guy who probably is like a finance guy who figured out this was a good gimmick and he was trying to do spaxs three years ago, but that market died, so then he decided he would do this scam. That's kind of how I think. And so that guy knows nothing. That guy knows nothing more than you know. And you might know more. So what are the arguments then these guys use? Well, what they'll say is, I'm going to get you yield. Yield is

just, you know, an additional return in addition to the presumed appreciation of the token. So, you're going to earn something on top of that, kind of like a dividend. Well, where's that going to come from? Oh, we're going to we're going to um you know uh uh use DeFi techniques. What does that mean? What does the don't accept that term deep? That means they're going to put your crypto at risk in exchange for some type of return. What could that specifically mean? They're going to lend it to some random Joe. So, they're going to take your Bitcoin or your Ethereum or your B&B or whatever the hell is in that DAT and they're going to lend it to some

dude or some company. Uh, that's called counterparty risk. like that that what if they don't get paid back? Well, then you lose. Okay. So, how well of a job are they evaluating the risk that that counterparty won't return the crypto? Well, I don't know. But do you know are these people extremely good risk managers? Do they have u impeccable underwriting skills like like like um Genesis Trading Company? the one that, you know, took all the money from the Gemini exchange and uh then lent it to clowns like three arrows capital so they

could speculate with freaking NFTTS. Like what is being done with that? Or god forbid the criminal conduct of Celsius where they convinced people that you you give us your your Bitcoin and we'll manage it like a bank and then anytime you want it back, we'll give it to you. except they were selling the Bitcoin immediately and turning it into other stuff and then buying a bunch of liquid junk in the hopes that they would make a better return than than than Bitcoin itself. So the the only argument somebody can make uh uh like a Michael Sailor could make after the fact, right?

Uh, and I give Michael Sailor a bit of a of a of a um of a protection from this criticism because uh at the time he was doing this, he was not following anybody. He just decided my company's gone nowhere in 20 years. The the the operating in company itself is doing nothing. um there's not a lot of risk of just getting some exposure through Bitcoin and then through a miracle of finance people uh assigned a net asset value of uh to Bitcoin that is higher than the than the spot price of Bitcoin. I think it got up to 1.5. So basically uh for every bitcoin sailor's company bought um

his company was getting valued at 1.5 bitcoin and that's great but guys that's a that's a magic trick that eventually ends right all companies that are traded based on their net asset value in all of time in nearly all situations there's exceptions but in nearly all situations will trade at or slightly below the net asset value of the of the um of the assets they hold. And the reason is because we as investors, sophisticated investors, we ascribe a risk to somebody holding our stuff. And we call that an agency cost. In economic terms, it's an agency

cost. It's the cost of somebody doing a thing on your behalf, but they have their own interests as well. So the fact that they have their own personal interests which involves making money puts you and them in some position of conflict and this is what we call agency cost. So, um there's a huge agency cost issue here with with DATs and um I think most of them will ultimately they will trade at their net asset value or a discount which means you would be better off just buying the crypto directly. So, do you think any DATs make it long term

or will they all fail? Because my my thesis on it is that the majority will fail. This is clearly a a moment when there's a lot of opportunity and a lot of financial market people look at that and they say great let's go let's and your point about you know a lot of them are spacks that have been they haven't found their their opportunity and here it is right in front of them and they go out and they take it but I do think that some DATs could be quite successful at the the objectives that you laid out but I think it's rare and I don't know which ones will make it and I think that there is an opportunity especially because I can see there's so much opportunity within crypto to get additional yield on

your assets through staking and restaking and all these things and yes there's certainly risk with that and you got to be very careful but most I don't see a lot of people learning or going to do that so if your choice is okay I could buy Ethereum or I could go buy this DAT and I believe in their operating team and I believe in the way that they are going to achieve this yield and I'd rather them do it. Then why not, right? I don't >> terrible idea. >> You think it's terrible. Okay. >> It's a terrible idea and this is why you've decided that you're going to allocate a percentage of your portfolio to this insanely risky asset class, right? It has no underlying collateral

that supports it, whatever, you know, Bitcoin, Ethereum, blah blah blah blah blah. We we all know the argument, right? There's nothing behind it, blah blah blah. And it is incredibly volatile, right? Historically, these things can drop to uh you know 5% of what they were at their highs and then they come back and they double and whatever, but it's a very volatile thing. So, think about the logic here. You're putting a an allocation into this insanely risky thing. And let's just we'll just like use the old days of of crypto for a second. Like you might be able to make a 100x on your money in a bull market, whatever in this thing.

Okay. Or I could put it in this special like bucket where these jokers are going to take it and they're the debt and they might get me 110. But the risk of them [ __ ] it up or not doing something when they should have, whatever, they just they just they're overlaying their decisions which are at odds with yours. the the the risk of that so overwhelms the little lame return you're going to get uh because you you know these guys have it that when I look at it on balance you've

already you know this thing has a it's a moonshot potential so maybe it goes you know 10 miles further out than the moon great but you would have been happy with the moonshot >> so instead Instead, you're going to double the risk of holding this thing by wrapping it with these people, they're not going to get you 200x, right? That's the key. If you were having these jokers manage it and they're like, "Hey, given our strategies, we could double what is already an insanely good return, you might just go whatever. It's, you know, like I'm gonna I'm gonna put my money on zero zero on the crabs table." Fine. But I say since you're already getting this

enormous potential, you don't need to exacerbate that risk, you should just be happy enough with what it's going to be because the risk in itself is pretty substantial. That's the reason I don't like these. I I um and and then we should separate the two types of debts, right? >> Yeah, please. >> There's there's a debt that is and by the way, let's define that. digital asset treasury company. These are companies one of two variety. One, it's an existing operating company. Uh maybe it's in the software business like Michael Sailor's company, Micro Strategy. And they're kind of like, we've got some excess cash. We could

keep it in bonds or we could stick it in this crypto and you know, see what happens. Then there's another type of company which is almost special purpose. This is like the spa where what's happened in these companies is they're formed specifically to raise money and put it into crypto. Each of these kind of has its own types of risk. The micro strategy company on the one hand you're like it's been around a long time. They have really good financial reporting uh board of directors. Uh they've stood the test of time. They probably have the ability to hire competent people to manage whatever crypto is on their balance sheet, but

they also have an operating company to manage. And I think from a like a as a CFO, it would be really difficult to be running a DAT, you know, a company that has an existing operating business, but where almost all of the financial returns of your stock have come from the appreciation of the crypto you're holding. To me, that's a nightmare because when I'm doing earnings calls, everyone's gonna just want to know about the crypto. And by the way, when the crypto pulls back, what do I tell people? Well, you know, it pulled back.

There's no real explanation for it. So, in some ways, you're better off just having one of these DATs that was like a spa just purposecreated to hold the crypto, but but because you don't have an operating company to make it complex. But the downside of that, of course, is who are these guys? You know, these fly by nighters who just raise some capital on Wall Street. Do they have good internal controls, uh, risk management, any of the things you would want people holding uh, volatile assets to possess?

Do they understand DeFi or are they going to like hire somebody or outsource to DeFi? Like, so that's another set of risks. So, you sort of have to pick your poison, I guess. As a CFO, I would rather be in the um in the latter category, right? I'd rather be the guy who just launches a purposebuilt company. It's just going to hold crypto. That's all it does. And then on my earnings calls, I'm going to say, uh, token go up or token go down. That's that's what I'm going to say. As a uh as an investor, I might feel better about a company that is a real operating company and happens to be a little juiced with

its crypto holdings. >> There's two things we've got to ask you about on the next time we get you on is one is what tokens you're buying right now. So, I won't forget that. I'll bring that back up. Uh, but also where Dats at because I think we need to continue to check in on this because it's it feels to me like I don't disagree with with what you're saying and I think that the story is going to continue to evolve and we'll see where they're at because I think there's a good chance that if we have you on again before the end of the year that what you're saying actually still might it might not have played out yet, right? we still might be in DAT season and everybody might still be

loving DAT. So, it'll be interesting to get your perspective as >> Yeah. And I'm going to make a prediction that it's not what you said. >> That's my prediction. I think as all of these people are rushing to raise money to do dats that make no freaking sense, I think uh they're going to uh lag. You know, maybe maybe Micro Strategy is somewhat different because it has this very uh effective mechanism for raising u uh money through debt instruments that uh are not corporate liabilities, but

are um where the the bond holders only recourse is to get the crypto in the event of a default. Personally, that to me is a great structure if you're issuing those. >> Mhm. >> Like we get a bunch of money from somebody, $100 million, uh we give them a guarantee and a bond that we're going to pay them back in five years and um either crypto goes up, we pay them back, uh they get their return, or it all falls apart and we just give them the crypto back, but there's no personal liability against us. I I think it's a great structure. I think what Michael Sailor did with with Micro Strategy is a great structure, but I think he's very

good at what he does and he's been doing it for years. >> He also was been running a public company since 1999, right? So, that takes a lot of uh of uh very smart people and you have to be very good at what you do and he understands SEC reporting and all that. I don't have the same degree of confidence in all these like fly by nighters. >> William, absolute pleasure to get you back on the show today. Thanks so much for joining us. >> You're welcome. >> Thanks for listening in everybody. I got to remind you as always, none of today's episode is financial advice. I'm not your financial advisor. Williams is not your financial adviser. This episode is for education andformational purposes only. And as I said at the beginning of the show, if you could do me a quick favor, give us a like, a subscribe, a

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