Are you too late to buy Bitcoin? Adam Back on where the gains are

Transcript

GM. Good morning. Welcome to the Milk Road Show, the daily crypto show for markets that feel less predictable than your toddler's nap schedule. I'm your host, Jay Hamilton. It's Wednesday, April the 23rd. Wow, what a rally. Green markets. The markets are green. Everyone is feeling good. But please, please remember y'all, we are still in macro mayhem. So, you should expect continued volatility from here. Now today we have a very exciting show. We are joined by a pivotal figure in cryptography and Bitcoin's history. He cited in the original Bitcoin white paper. Some speculate that he might be Satoshi himself. I'm talking about Adam Back.

Currently Adam is the CEO and co-founder of Blockstream, a leading Bitcoin infrastructure company. Today we're going to discuss with Adam early Bitcoin stories. when Adam first met Satoshi, what it was like working with him at near early days. Bitcoin's 200 day moving average just passed $46,000. That's a big milestone. What does that mean? What does that signal? Adam recently was in Paris for blockchain week and he talked a lot about institutional adoption. What is happening with central banks buying, sovereign wealth funds buying? We're going to get an update from Adam on where he sees institutional adoption now and in the future and what does that all mean for Bitcoin's price from here. Now,

before we jump in, I've got to tell you guys very quickly that we are doing something really bold at Milk Road because we've got serious conviction in our thesis that we are still in a bull market and this is just a pullback and all of our indicators on the macro side are saying to us we are going to come back. Now, obviously, we need to see what Trump does, but we're watching very closely and we're willing to bet on it with real money. So, if you join Milk Road Pro by May 1st, you get 20% off for the year. And also, if you stay subscribed until October 31st and Bitcoin is not at an all-time high, we'll give you a refund. Okay? We'll give you a refund if we're not an

all-time high by October 31st. Now, today's episode is brought to you by Moonay. trade crypto fee free, fast, and on your terms. It's also brought to you by Coin Shift, powering top crypto treasuries with their yield bearing stable coin, CSUSDL. Without further ado, Adam, welcome to the Milk Road Show. Hi, thanks for having me on. Absolute pleasure to have you. Okay, I've got to start with uh when when everyone comes into Bitcoin, there's this uh this saying that everyone has which is like ah uh it's I'm too late. Oh, Bitcoin's already at 100K. I I'm too late. That that feeling seems to be a a prevalent feeling. I know my friends, my family, everybody outside always says that. And

I want to go back to a post that you shared recently on your Twitter which shows that apparently you had the same feeling back in 2013 when you first introduced yourself on a Bitcoin forum and you commented that you had less Bitcoin than how Vinnie at the time and you were a little bit feeling like you might be too late in 2013. What is this feeling of everybody being too late? Where do you think we are? Are are are people too late or are we still really just so early? Well, it's a bit of a fractal experience.

Like, you know, people assume that it was different 5 years ago or 10 years ago, but it's just the same. It's just the numbers were percentage way smaller. And in my case, one of the reasons I was thinking I was late is that I actually knew about Bitcoin from like August 2008, right? So, I got the first email from Satoshi. only ever interacted via email and not that many emails that are published later. Um, and yet, you know, like you everybody has their regrets already, right? And so my thought was, well, this is cool. He solved he solved the remaining problems on how to build a decentralized ecash system which you know people like and myself I tried to

do in the past and uh it you know so that uh I didn't I was just waiting for it to bootstrap basically. So, uh, that's when I didn't get involved until sometime in 2013, I think. Can you can you just explain quickly to us, uh, hash, which you invented in the late 90s and how what role that played in the development of Bitcoin.

Yeah. So, uh, I mean, it was kind of developed in the context of well, it it was it was trying to combat spam, so the kind of postage stamp, right? and the it was to do with privacy. So there's a a system where you can um send emails anonymously and people would spam through it. And so the uh the the challenge was there was no electronic cash. If there was a working electronic cash like Bitcoin at the time, the obvious thing would be you you know you pay a few cents to send a mail and the spam gets you know more expensive to do but there's no cash. So I was trying to find something simpler than e-cash. it was it was hard to to uh design a distributed dcash system and

people had seen a centralized one fail at that time. So they were trying to figure out to do it decentralized and so what I found was well making a respondable e-cash is hard but to make a postage stamp that is not respondable was achievable. So that's what I did and that that became you know used for sort of email anti-spam but also because people were at that time you know brainstorming about how to design a decentralized ecash system because it's seen digash failed you know because of central system the it immediately caused conversation like within days by multiple people that uh hash was a bit like digital scarcity digital gold and

so you know by About a year later, Nick Sabo proposed Bit Gold and Wayi Boney and later in 2004 how Finny implemented a centralized but proof of workbased system called RPAL reasonable proof of work. So uh after hash all of the designs you know the bit gold the boneyal and eventually bitcoin were using hash dash because it was the only sort of decentralized way to bring coins into existence without needing you know a relationship with a bank or something right which is which is difficult you know they might they might not be interested in giving you a bank account or they might cancel it at any random time. It it's just it's so interesting

the language that you use that is no longer the the lang like e-cash is not a word that continued but that was the early word and we had email and so you guys were all thinking well ecash that that's the that's what crypto has become obviously. Uh I've got to ask you the direct question because my listeners will yell at me if I don't. Uh you were one of the first to get an email from Satoshi at least as as far as we know. Um, are you Satoshi Nakamoto? No, I'm uh really not. I mean, obviously people, it's a fascinating topic because it's such a novel situation, right? That the founder of a major internet phenomena is anonymous and stayed that way. So people

of course are curious and speculate about you know people are developers people are interested in previous electronic cash systems or coders or cryptography guys and you know there are a number of people like that I'm one of them so of course they speculated but but it's not me. It's not you. So in the in 2008 was when you first got an email from Satoshi and when you first started participating and working on on Bitcoin. Well no he did I think he didn't actually collaborate with anyone because in 2008 August he sent me you know a draft white paper and later on

the forums I went and read 2012 2013 I went and read all of his old posts. he' already left the forums by then, right? And somewhere in that that scroll back of Satoshi kind of forum posts, he says that he'd been working on Bitcoin for a couple like the only way like he wrote the code before the paper to prove to himself that it worked. Some comment like that, right? So I think already in August by the time you sent me the paper you'd already implemented it and presumably there was some bug testing and stuff and then he released the source code in January 2009 or maybe a little bit earlier but like the network launched in January 2009. So I don't think anybody helped him other than you know looking around at things he cited like hash dash muckle trees

digital signatures a few a few building blocks basically. Um, but he didn't he didn't sign uh the other ecash systems except for way B money, but that was basically because my response that was my response to him. Hey, have you seen B money? It seems related to what you're doing. So, he added that as a citation. So, it's hard to tell, but it seems like he wasn't actually aware of those systems. [Music] Um, so you know, people are interested to claim to be involved, but actually it seems like he did it all by himself. So incredible and and what an incredible gift to humanity. The I think there is something I don't want to get deep in

this conversation, but there is something to be said about a uh creation like Bitcoin not having a public figure as the founder. It is certainly gives not only is it great media and great mystery and great story and great conversation but it also gives almost more credibility to Bitcoin because it's not about this person out you know flaunting and talking about themselves and everything they've created. So shout out to uh Satoshi wherever you are whoever you are we appreciate you endlessly. Thank you for your contribution to humanity. Uh okay, I want to switch Adam to uh talking a little bit about stories of today which is Bitcoin is really benefiting right

now it would appear from all this macro mayhem. The there seems to be a with all this macro mayhem there's obviously gold is doing very well. There's a lot of people, a lot of investors moving into gold, flight to safety, you know, go to go to the the riskoff asset. And we've always talked about Bitcoin as a as a riskoff asset because it is digital gold, but it's never traded like one, at least not for the past five years since the COVID stimulus in the US. That's for sure. It's traded like a high-risk asset really correlated with US tech stocks.

Uh just yesterday, recently this week, Bitcoin's 200 day moving average passed $46,000. You tweeted about this. What does this signal to you? Yeah, it's an interesting metric because, you know, people are always living in the in the moment in the short term and it's uh it's approximately a fouryear average. So, it's kind of slow. is the dark line underneath this and the dotted line is the uh current Bitcoin price for log scale. So you can see it's up only. So it literally has only ever gone up which is which is nice. And um so it's kind of the floor price. You can see that it went under it a bit

during the co market turmoil but generally speaking even if you look previous to that even in a bomb of a bare market it barely scrapes. I think the the claim before is it never closed a month under the 200 week moving average. So when it dipped it happened to be not at the end of the month let's say. So generally it's a kind of I I think it's a good way to to manage um you know emotions about volatility. If you just think about the dependable price of Bitcoin being a 200WE moving average, then everything above that is like froth volatility, then you won't, you know, you won't be so affected by short-term price movements. And, you know, it's it's coming up fairly fast at

the moment, right? It's uh putting on another thousand. I put another tweet on the chain, put another screenshot every time it it crosses. It doesn't seem like it's many weeks since the previous one. And um yeah, so it's it's a nice metric to think about kind of floor price for Bitcoin. And of course, you can't you can't buy the 200E moving average. There's no you know otherwise it'd be a fantastic thing to buy, but it would be a good thing to buy up, right? Yeah. Yeah. I mean you can kind of buy it like you you can you know it's an average rate. So, so basically they are you would create it by you know buying 0.001 bitcoin every week or something but but

the problem is you also have to sell the uh the week uh 200 weeks ago because it's it's the rolling average. Anyways, you you could it's a nice thought experiment. If you could buy this instrument, it would be fantastic, but you can't. And it seems to be very difficult like you try to create it, it's going to be so attractive that the you know the funding rates will kill it or something because if somebody has to sell it to you and that person is a hedge and that's that's not a fun thing to hedge. I wouldn't want to I wouldn't want to hedge that. Look at that chart.

Let's let's talk quickly about Bitcoin right now. What's your thoughts on where Bitcoin is at? I mean, obviously this conversation would have been very different if we had this a week ago because we're in such a volatile macro market. So, I don't know if you feel free to comment on the macro side if you want, but I more so am curious on where you think Bitcoin is in in the bigger picture of where it is now and where it's going. Do you buy into this narrative that it is decoupling from US equities currently that it more and more people are truly seeing it as digital gold and a riskoff asset?

Um yeah, it seemed like it, you know, it was getting a bit correlated for a while and then plus if you zoom out, you know, people look in the short term if you zoom out, Bitcoin obviously has the correlate because it's up, you know, like six times or so since the bottom of the bare market, right? 15 and a half thousand not that long ago and the stock market hasn't done that. It's going the opposite direction, right? But there was a day where you know basically Bitcoin jumped I don't know like 5% and the stock market moved in the opposite direction. There's a complete you know they moved in completely opposite direction. So that kind of broke the assumption a bit about the uh the

correlation and so yeah I I think it it may increasingly decorate and I think the reason is that you know you've got um some fundamentals and the fundamentals are very bullish. You know there's a lot of positive things happening for Bitcoin. In a lot of ways, I think Bitcoin is underpriced at this point given, you know, all the things that happened since it was 69,000 a couple years ago. So, 93,000 isn't that much higher than it was then, but you know, now we have the US government uh you reforming all the regulations. You've got banks allowed to custody. You've got spot ETFs. You've got institutions

making announcements every week or two. got sovereign wealth funds buying like earlier today yesterday there was something about soft bank tether and Bitfinex do starting another you know strategy company um so there's a there's a lot of positive things happening institutions are I mean institutions I think people think about institutional adoption is kind of big faceless corporations buying and they're not sure if they like if they even want that but the point is that the the institutions are just professional money managers mostly managing you know savings plans, pension funds, life insurance policies maybe for which which is just the the savings or

you know different types of financial things that the individual relies on and most people are more you know trading stocks or managing their own trading or talking to a broker. They have their share exposure is via you know their life insurance or their pension plan or something like that right and then universities have some universities have an endowment which is kind of for the benefit of the students ultimately and then you've got the sovereign wealth funds but you know those are managing the wealth of the country directly for the citizens right so you think about it like that and the institutional adoption that there is I think is actually very small percentage you know So there was some news that one of the Abu Dhabi uh

UAE Sovereign wealth funds bought about 450 million Bitcoin people wow that's amazing but it's those those uh UAE uh sovereign wealth funds are enormous though it's you know fraction of a percent actually it's a drop in the bucket for them right and I think the other thing is because most people are not managing their own money the institutional money managers managing pension funds and so on are managing a lot of money. So, you know, if they go from um zero to a couple of percent or to 5% and and they form a thesis about why that's the right thing to do and those funds are often very long-term managed, you know, so the money will be in there

for 5 years, 10 years, 20 years, like it's a pension plan or something, then putting an allocation into Bitcoin is pretty pretty smart thing to do really. If you if you look at the history, right, it's a outperforming asset class for 15 years. The guys are behind the curve, right? It's time to catch up. And um it sounds like they're starting to do it, but it's a little bit slow, right? Because they've got a lot of processes, due diligence, and actually at Blockstream, we have a we hired uh this guy Sean Bill who's a hedge fund manager, but he also had a pension fund for a decade. And it's a US pension fund. It's the first public pension fund that put Bitcoin on on a pension fund balance sheet and it took him a couple

years to get get that through and it's all very new, right? That that was in he started in 2019. It took him until 2021 to get it in there. But, you know, the conversation's moved on since then because now you know the overtime window is has moved, right? You've got the spot ETF since then. You got, you know, new uh people in the administration, a lot of Bitcoin enthusiastic, financial experienced people, new people in the SEC, improved regulations, repealed, you know, regulations or friction to banks adopting Bitcoin or offering Bitcoin related services. There really a lot of things happening. Now, of course, it's, you know, it doesn't happen like the

same day they make an announcement. you think it might take them six months or something, right? But there's a lot of things coming through and I think, you know, the Bitcoin market is quite reflexive, right? I mean, we saw that the other day, right? It jumps almost $6,000 in a day. And people forget the the statistic that if you you know, most of Bitcoin's gains historically have been in 12 trading days per year. So that's that's why you need to hold because if you miss those it's not it's not so much fun to hold you to invest in Bitcoin. So yeah there which is why DCA is you know one of the simplest and best strategies for

Bitcoin because if you try to time it you you know you might miss it. It's just keep it simple and keep on stacking and keep on buying. Uh I I I want to chat about uh Bitcoin price for a second because you mentioned and I would agree with you that it feels undervalued right now and I just want to take a look the the Milk Road team put out uh a tweet about this just yesterday when they were basically talking about uh they used I don't know if you've seen uh Michael Howell's u pie chart of the what what the core factors are that impact Bitcoin's price. Have you seen this before? Uh, no. Looks interesting. So, he breaks it down as 40% is global

liquidity, 26% is the gold price, 11% is gold to Bitcoin ratio, and then 22% is sentiment, investor risk appetite. Uh and as the Milk Road Pro team says, that's the problem child right now is that uh the investor sentiment right now is so bad as a result of the macro and all the tariffs that are happening. Everyone's lost confidence in the markets currently and there's just so much uncertainty. So a lot of people are standing on the sideline. But when you look at these other three factors, uh and let me just walk you through them and would love your thoughts on these.

Uh first is if you look at the Bitcoin to gold ratio, you know, look at this chart, right? Ever since January, the Bitcoin to gold ratio is just going up. This is since January 2023, sorry, is just going up. So there's there's but but you see where we are right now. We're in this big week downtrend, right? So Bitcoin is definitely we're getting the price of Bitcoin is going up relative to gold. But look at this downtrend we've been in since basically late December of 2024, big downtrend and we're about to hit that line. You would assume, okay, lots of room to move up there. Global liquidity, another chart that everyone loves to look at when

talking about Bitcoin, right? Bitcoin typically labs lags global liquidity. M2, well, look at this. M2 has taken off. This is a three, a 12week lead that M2 has in the way they present this. And here's Bitcoin down here. This is usually the bottoming zone. Okay, great. That would say we're ready to take off. And then of course gold price. Well, everybody knows what's happening with gold all right now. All-time highs. Uh gold might gold might be the one that might be overbought now because everybody's been piling into it so much over the past few months. Uh so what does that all translate to? Well, three of these four factors are very positive right now. And once we settle this one, once we have some certainty in the

markets and some investor confidence come back, ideally as a result of some sort of end state to the tariffs where we just know what's going to happen, then you would think, hey, Bitcoin's kind of a balloon being held under the water that could that could be ready to explode. What do you think? Yeah. And I I mean you can see that the risk appetite improved the other day when when price bitcoin price jumped. And I think like with stocks when there was uncertainty people will reduce leverage or like pull back to cash and sort of wait for a direction. So, I think the recent shift in correlation and Bitcoin jumping up so rapidly has uh probably

means there's more dry powder and uh leverage access available than would be normally the case for like a Bitcoin market move. So, we'll see if it if it if it holds, but you know, it only takes another day like yesterday and we'll be at 100K. you know, it's uh you know, six or seven away from that like right now, right? So, it doesn't take much for Bitcoin to to uh move significantly and once once it does, then uh people follow and and that applies to, you know, ETFs and it it's sort of reflexive partly

because of the news cycle. you know, the fact that the price is up is news and then the brokers and uh financial advisors call their clients or they they see it on on, you know, financial news shares and then they call the broker and try to buy, right? So, there's a lot of people that will buy things that are going up and uh so that's that's one of the things that can happen. And if the you know decoupling holds that could give people a reason to you know start treating Bitcoin as a a growth story you know an adoption story plus the correlation. So, you know, the the other parts of it, the uh potential upside,

the historic, you know, growth per cycle averages and the the fundamentals, all the all the kind of institutional indicators and the treasury companies, you know, like there's a lot of every few weeks there's another treasury, another existing public market company. Oh, you know, they just bought some of their coin. There's some new there's a new one. The the the current ones are still buying MetaPlanet. you know, Michael Sailor Strategist ones. Yeah. Yeah. I mean, you can see some interesting I mean, one way to look at the amount of uh Bitcoin that these different persistent buyers are buying is is to look at the uh you know, so the ETFs bought since the having two times as

many Bitcoin has as mined on a daily basis, right? So, 450 bitcoins mined. So, the ETFs bought 900 Bitcoin a day roughly. And uh Micro Strategy also bought two times and you know there are other companies and they're continuing to buy right. So you know one of the probleming things were was basically who's selling you know the price is going down somebody's selling but you know there maybe five or six times as many coins being mined as are mined being bought up systematically by these different entities.

So, you know, I think uh there another another factor is the the coins left on exchange that are tradable. Um the new uh the ETF buys apparently are sticky. They you know they buy and hold. They don't they don't sell very easily. So that's good. Um, so once the, you know, the available coins that people can buy dries up, you get what people are talking about as a supply shock or supply squeeze and and that could have some rapid effects, too. And you get the God candle or the Omega candle that everyone loves to talk about and make memes about. Yeah. I mean

the the so-called God candle is like $10,000 and I think we just about had one of those in the last three months. True. I mean I think you know you technically it should be depends how you count it, right? If it's if it's from the close of one day to the open to the close of the next day then we didn't quite make it. But in terms of 10k move within a day we had that and yesterday we had half of one like you know uh $5,800 move. So it's tough to get bigger. Yeah. I mean, right. Okay. I want to uh touch more on institutional adoption and what you're doing at Blockstream and who you're working with behind the scenes and what you're seeing uh in terms of more buyers

coming into the space. And I also want to talk about where you see Bitcoin price going from here. But before we do that, we just need to take a quick moment to hear from our sponsors who make this show possible. Let's be honest, everything in crypto comes with fees. But here's a nice surprise. Moon Pay Balance doesn't take a cut. You heard that right? No Moon Pay fees when you buy or sell crypto with your Moon Pay Balance. Top up with dollars, pounds, or euros. Then you're ready to trade instantly whenever the market moves. And if you change your mind, withdraw your cash. No Moon Pay fee there either. Simple, fast, ready when you are. Check it out at milkroad.com/moon. Today's episode is to brought to you by Coinshift. Meet

CSUSDL, the stable coin built for institutions and Dows. Don't just hold basic stable coins. Earn yields all without compromising security. Backed by regulated real world assets and secured with institutional grade risk management by our friends at Steakhouse Financial. Put your treasury cash to work earning native yield and protocol rewards. Built by the team behind Coin Shift, which is trusted to manage over 1 billion in business treasuries on chain, including a Gitcoin, and hundreds of leading institutions. CYCSUSDL is gaining traction at milkroad.com/coinshift. Okay, welcome back Adam.

Where do you think what are your expectations on where Bitcoin goes for from here for the rest of this year or the next 12 months? Do you think that we have still more volatility to come over the summer? Do you think that we're going to end the year higher? Do you do you have a price prediction you want to share with us? Yeah, I mean, you got you got to bear in mind I'm one of the plumbables, so I'm always astounded that Bitcoin is as cheap as it is. Um and so I think one of the debates at the moment is the diminishing returns theory. So if you you know if you look at the previous two or three harings the percentage increase is has gone down but I think

that that is partly because of the COVID and the supply chains and the money printing and the economic effects of that. Right. I think the last hinging was kind of cut short by that a bit and you know the fact that we had an end of epoch new alltime high 73 and a half just before the hovering it's kind of I viewed as a kind of confirmation that you know it it would have gone higher if not for all of those headwinds and so you know I think it's probably incorrect to draw too many inferences from the last cycle And so, you know, if you if you take the L, I think that there's a lot of

positive news that, you know, $100,000 is way too cheap. And so, I expect we'll end the year much higher. And, you know, we get between $500,000 and a minimum and and a million uh during this cycle. So, we'll see if that transpires. And I think the other thing is you know you people talk about diminishing returns and got the different models. I mean models are not necessarily that predictive but you know stock to flow power law or various other models and you know they are this this diminishing return theory you know like technically an S-curve like adoption of internet adoption of

mobile phones when they first came out things like that they go through a gradually phase where it's kind of niche thing and it's expensive and very few people have it and then it becomes a social phenomena when everybody has it and the adoption starts to get steeper right? Say it could almost be the opposite, right? People are calling for diminishing returns, but you know, maybe there are 100 million people with some form of Bitcoin exposure. Um, you know, that can that can reach a tipping point when there are few more people that have it so that, you know, everybody's talking about it and they're, you know, they're starting to use it, they get their friends into it. It's kind of network effect, right? So ex every reason it could actually go in the

opposite direction and start you know doing the opposite of diminishing returns like start growing faster and the institutions are another another form of adoption ETFs are another form of adoption um and you know of course the sovereign that's a whole different topic right if if the US eventually does something on a on a bold scale you know a program to buy a million bitcoin or the bit bond plan which is pretty interesting to kind of uh mix bitcoin buying with a treasury bond so you have a kind of money back you know a repayment guarantee from the US government but some bitcoin exposure I think that's pretty interesting so if

one if one of these things happen I think that changes the picture as well because other governments would you know they'd have to react they'd have to figure out what they're going to do and it's very hard for a government to do things quietly and you know you can only you know you can't you can't buy OTC in a limited quantity because the OTC sellers run out and then you know everybody's buying on their exchanges and then you run out of bitcoins and the price gets higher. So I think you know I think the 500,000 to a million is without you know the US government buying just just not selling what they already hold through seizures and things like that. So we'll see what happens.

But even with just the, you know, the overturn window move that the US government, you know, most liquid stock market in the world, uh, a well- reggarded regulator internationally is actively talking about acquiring Bitcoin is like, you know, crazy. Nobody would have believed that 12 months ago, right? Yeah. I it's it's completely crazy. And I think it's it it is news that has gotten a bit lost and a bit forgotten because we have been we've gotten so focused on tariffs and obsessed with whatever Trump is going to tweet next that we almost forgot that Trump said, "Hey, he set a committee. He said,

"Figure out how to go buy Bitcoin and give me a report by I think it's July 23rd is the date when they have to submit a report with a plan of how to buy Bitcoin." And as you said, there's many ways they can do that. You know, there's Cynthia Lumis' plan of buying a million Bitcoin over five years, which would obviously be absolutely massive if that was what they went with. There's the Bitbond plan. There's other, you know, budget neutral ways to buy Bitcoin. You know, there's even obviously even just them saying that they're not going to sell it, which Trump has basically said that at this point. Uh these things are it feels to me we had we had Matt Hogan from Bitwise on the show uh a few weeks ago and he really said it best is it was the last

the last check mark that Bitcoin really needed was that hey governments are going to support this. So that was the last risk that really stood out there and it's very clear that governments are going to support this. You don't have them all buying it yet. Although, you know, you have Bhutan and incredible story of what's going on in Bhutan and I'm sure a lot of other countries are looking at Bhutan and saying, "Okay, why why are we not doing the same thing?" Uh, Thailand, I'm pretty sure, is going to start buying soon. It feels like that's coming any day now. Um, we I think there's some alpha that I've heard from behind the scenes about that. So, you know, it just feels inevitable.

Like, it just feels inevitable. And you know, your chance to get in before all of them is running out quite frankly, you know, and this tariff situation could be a bit of a gift. Like the fact that we could buy below 78K and we dipped even how low did we dip? Did we dip? I think we might have wicked down to 69. Like that's Oh, I think I think it was like 74 and a half or so. 74 and a half. Yeah. Yeah. I think I'm I'm dreaming about 69 because that's what I want to buy it at. Yeah. Well, I think you know that's that's where the dollar cost averaging comes in, right? Some people I mean selling Bitcoin is being short Bitcoin. That that always makes me nervous. Hate selling Bitcoin. So yeah, and that that's always the risk, right?

That that you if you were to sell and and the price jumps as it did yesterday, then what do you do? You buy it back at a higher price, right? Or you get stuck on the sidelines, which people sometimes do. Let's talk a little bit about your work at Blockstream and what you are doing in order to ex expedite the adoption of Bitcoin around the world, who you're working with, and what you're seeing from behind the scenes. you know, you would speak to institutions and tradi on a regular basis, uh, which I'm sure would give you an idea of what they're thinking, even though maybe they're not all, as you said, taking action yet because it's a much longer time frame for them to take

action than it is for a retailer to just all of a sudden decide to go and buy. Yeah. Yeah, I mean of course you see you see the news of the different financial institutions that are trying to get to market to offer Bitcoin related products to you know different types of investor and we are more talking with sort of pension the the slower moving ones that that are quite conservative like the pension funds um endowments family offices. So the family offices are a bit more agile obviously because they can make their own decision. But some of the other entities are quite cautious and they have a responsibility to manage

you know lots of individuals savings or pensions and things. So take it seriously and uh takes them a while to agree on the processes and um you know think about how to invest in Bitcoin whether that's a small percentage or some kind of product that is uh less volatile you know sort of a a d-risk Bitcoin which is also another another way for people to participate when when you speak to them what's the what's the typical conversation is Is it you explaining Bitcoin to them and explaining its properties and its traits and giving them the investment thesis or is it more they already buy into the

investment thesis and they're trying to figure out the how? Yeah, I mean the impression you get is it's still early. Um and you know what we were saying a little earlier about the fact that the US regulators are now being uh open for business improved regulations matters to this audience and that the US government itself is you know talking about sovereign reserves there those kind of things are you know a green light and legitimizing in their eyes now you know for us as people who've been interested in Bitcoin for a long time we don't need that or or maybe you know some I'm not sure how they feel about it, but for the, you know, that kind of more institutional audience, it's actually it helps them get approval to do it. And

sometimes the fund manager is, you know, that the allocator rather of of the funds is enthusiastic, but he still has to go through the process and get like committee approvals and things like that. So, you know, there are some kind of lower lower risk ways for them to participate as well, like they they're doing diversified things like asset back lending, lending dollars against all kinds of different assets that are liquid. And so, lending against Bitcoin is is something they can do to participate in the Bitcoin market. Um, so that's kind of one early thing. Um, interestingly, you know, the the family offices, they can they can move more

quickly and uh we also have a kind of lowrisk Bitcoin yield fund, which is interesting for treasury companies and for uh Bitcoin holders. Like there there's been some high-risisk Bitcoin yield funds that that offered high interest rates that failed in the last couple years. So people are rightly conservative uh about that topic but uh we're you know looking to provide the safe return which isn't a very high return. That's the uh concept. Before we uh started recording uh and we we'll wrap up shortly here. uh we you and I were chatting about the

various uh investment vehicles that exist for Bitcoin and how there is more and more experimentation happening in this place. Uh particularly on the corporate treasury side. Uh and one that you were pointing out to me that is just uh picking up steam right now is the blockchain group which is basically adopted a convert sort of a similar strategy to micro strategy but also a little bit different. Can you walk us through what they're doing here because it's very interesting. Yeah. So you know it's an established software company a small company on a uh Euronex Paris stock exchange. So it's public company for some years. uh it's an independent software vendor and they decided to you

know dive into the Bitcoin treasury strategy and um so they you know the rules for how you can raise capital are different in different countries and but they've done a you know several noble things here so one is they did a private placement which is just a way to sell shares so that's quite conventional and then more recently in early March they did a much bigger Bitcoin raise and and bought I think it's like 580 bitcoin or something like that which you know increased the bitcoin they held by a factor of 14. So it uh and they did it in a novel way which is they issued a convertible note which micro strategy has been big with but this convertible

note has a unique feature which is that the it's denominated in bitcoin. So micro strategy is selling the convertible notes for dollars. these guys are selling that convertible note for Bitcoin and a convertible note is a form of debt unless you with the option to convert if a certain price range is met. So in this case they you know if that price range is not met at maturity which is about five years I think um they'll give you the bitcoin back. So you know that that's one novel thing and that that's uh you know that's that's very high assurance because they have the Bitcoin park the independent custodian and you know whatever happens to the Bitcoin price they can give it back right and uh the other interesting thing which I'm commenting on here is

it's just reached the conversion price about 7 weeks after they did this raise which is pretty fast. So, and then I also did some like rough calculations to see how that worked out. And because you're making a Bitcoin basis investment, you know, if you put one Bitcoin in, you can look at well, if you were able to convert, it has to stay at this level for 20-day average um and and sold those shares back to Bitcoin or what is the current value of the shares? It would be about 1.3 Bitcoin per share. So, it's a pretty good result in a short period of time. I mean, of course, they're continuing like the treasury companies do, looking for interesting ways to raise more. And uh the other the other cool thing here is that because you're investing in kind, like you're

putting Bitcoin in, you don't suffer a capital gains tax. This is this is for French taxpayers, and I'm not a French resident, but people are, I'm sure there are many early Bitcoiners in France, too, that they don't have a capital gain when they invest into the convertible note. And there's another kind of rule if you if you take the tax advice that if you hold hold the shares for 5 years you can you know sell them convert back into bitcoin after five years also without capital gain. So effectively it's a way to kind of mitigate capital gain on bitcoin which might have been bought you know at $10,000 or whatever right. So, it's kind of interesting tax advantage structure and

uh yeah and and you know many people in the Bitcoin space don't have any dollars or euros, right? So, being able to invest with Bitcoin without triggering a capital gain is like potentially interesting. Um, and then the last thing they did, which is kind of fun, is they gave all of the shareholders uh one uh BSA, which is it's an acronym, but it it's basically a 12-month option to buy their shares at 54 cents a share and and they're now like 72 or something, right? So, um the the point is they they granted it, right? So they just gave you an option and you can you

can trade it. It's been listed since uh 11th of April I think. So you can trade this this option. It has a value. If you count the current value of the option it's another 80 another 8%. So that's like 1.38 times not 1.3 times compared to Bitcoin in and you know people are trading it but ultimately somebody you know assuming it expires in the money somebody's going to use it to buy uh old PG like the blockchain group shares and that will give the company more money which they will then turn around and use to buy more Bitcoin. So kind of interesting incentive, right?

Gives somebody an option option to buy the shares and if it if it's in the money at expiry, then company gets more money um to buy Bitcoin. So that's kind of interesting. Um and they're going to give those same options to the converts once they convert as well. So there'll be even more of them on the market. It seems like a like where where's the risk? Where's the downside? It seems like a a win-win. Is there is there risk? Where do you where do you see the Well, I mean there there's always a little bit of risk in in not holding your Bitcoin in a cold wallet, but other but know they're using an independent custodian. I'm sure you know it's a good

brand. I presume they it's in the document somewhere and uh so you know it's it's fairly rfensed. It's in a separate subsidiary. they're not going to spend it to operate the company if they have a you know a down quarter. Um, so it's it seems pretty low risk and you know their ability to repay the convertible note. I mean for most Bitcoin investors it's pretty unlikely to say the least that Bitcoin will be at a lower price in 5 years time. But you know if if it never reached the conversion premium which is already tagged, right? Then in theory you've got that downside protection measures give you the Bitcoin back. Plus you've got this you know if you're a French taxpayer you've got this uh tax scheme.

I think you have to do something like put it in some kind of account to benefit from this but then you've got this kind of tax planning advantage which you know even if it didn't convert might save you a bundle on capital gains right so it's um yeah it's very interesting and of course it's making intelligent use of the specifics of it of it local market so we'll see how they you know they progress but it's it's looking pretty interesting so far Adam absolute pleasure to get you on the show today thank you so much for your time and your contribution to Bitcoin over the many decades that you've been working on cryptography.

Yeah, thanks for having me on. It's always fun talking about the uh Bitcoin ecosystem and markets. It's a it's a good time to be chatting about it. Everybody, thank you so much for listening in today. Before I let you go, I've got to remind you that we have got a sale on Milkro Pro right now, which is our premium product. You get a weekly report directly into your inbox breaking down charts of what we are watching within crypto, whether it be specific assets or whether it be the macro environment, how we're allocating our portfolio. If you want to be invested in this space, you definitely need to go pro. Also, you get access to our community where you can talk to myself and the rest of our team every day to make sure that you are investing with confidence because we know that this is

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