$500M Bitcoin Buy🔥Strive CEO on Corporate Trade Returning

0:00 Is the corporate Bitcoin trade back? Today, we're going to be breaking that down. Get into where Bitcoin is heading. You guys don't want to miss it. Before we do that, I want to thank our sponsor. That's iTrust Capital, where you guys can get into your own crypto IRA, cryptocurrency stocks, gold and silver, all available over on iTrust Capital. One account, unlimited possibilities. This is one of the platforms they've been around for quite a while. You guys can go over and use them. If you have a current IRA, you can transfer that If you want to start a brand new IRA, you can also do that as well. So just use our link down below. It's going to give you a $ 100 funding reward to get started. And you're

0:36 going to have to start tax planning soon. And IRAs are one of the diversification things that you should be doing to set yourself up for success. Let's just get started. I want to bring in our guest today. And of course, that is Matt Cole coming in from Strive. Nice to see you, Matt.

0:51 How are you? Doing great. Thanks for having me, Paul.

0:54 So I got a couple of points I want to hit on. One, of course, is this right here, news item. And it's where Stripe's pretty active right there. You guys are scooping up another 1,223 Bitcoin, 100 million right now. Total holdings reaching 36,000 Bitcoin. So you guys have become a big player on this. The strategy continues to accelerate in this area. When you look at the rest of the companies that might be putting Bitcoin on Treasury, Is this something that you think is starting to make its way into TradFi in a bigger way right now?

1:30 It absolutely is. And I have exciting news that just before we popped on, we actually announced we bought another 6,000 Bitcoin. So you literally can't keep up with the Bitcoin purchases here. We have 43,000 Bitcoin on the nose here. But really what it comes down to is that the Bitcoin's trade itself is not broken and it will never be broken because the dollar is broken. So the fiat currencies are broken.

1:57 So as long as this debasement trade that really is the structural engine behind which we're building our treasury and our whole strategy, as long as that does not change, then the strategy is not broken. But it would make sense that our strategy and the strategy of MSTR, also named strategy, is to amplify Bitcoin's exposure. And so in a Bitcoin bear market, it is math. And so that amplification works to the upside to outperform Bitcoin. And it also works to the downside. Strive was unique in this year in the sense that Bitcoin is down a little bit right now on the year. Strive is up massively.

2:40 That was from phenomenal execution from the team. I would say that would be a rarity. generally speaking, even for our own company, we would expect if Bitcoin's down for our company to amplify that to the downside. But we're underwriting the risk of Bitcoin from a very long term perspective. So we have these preferred equities that are not debt.

3:00 They never mature and we pay an interest. And really, it's a carry trade. Our bet as a company is that Bitcoin will go up over the long run more than our cost of capital. And if it does, the math would just work that we will outperform Bitcoin. And there's a lot of demand for that because a lot of people understand the rolling heel that is the debt crisis in the United States and the world. And they want to not only own something that's scarce, but also amplify it, which is a common equity. And then there's a lot of people that want income, and that's a preferred equity. And so I think we're really just getting going over what I think will be a very exciting next couple of decades for this trade.

3:37 All right, so- So Matt, I want to kind of ask you something because you look at the current market, Bitcoin dips below 80K. You guys are out purchasing 511 million worth of Bitcoin. Then you have JP Morgan jumping in saying, hey, yes, we're going to see Bitcoin continue to go up. In fact, they've come on to their analysis on long-term return outlook at 10% versus everything else.

4:06 It's a high performer. So What makes you so confident that right now is the right time?

4:12 Yeah, so what was interesting about that JP Morgan article was that of all of the assets in their long-term capital markets assumptions, and I'm very familiar with these, they call them CAPM, capital market pricing assumptions that are used for asset allocations from when I used to work at CalPERS. We did a lot of work on these. We studied every different banks. Is the fact that they have Bitcoin in there, number one, so it's a new addition. They've never had Bitcoin even in there before. But the first time they put it in, they actually have it as the top expected performer. And so these predictions are typically not meant to be on the nose as far as the actual percentage gain. But the fact that they had

4:53 it as number one, I think, is really fascinating. They did say that there's scenarios that could be better or worse. But this is a big change from JPMorgan's. who, as we know, Jamie Dimon's been very critical of Bitcoin historically to move in that direction. And so I think that the reality is that banks, everyone sees the fiscal problem in D.C. and the dollar, and they see what people like Secretary of Treasury Scott Besant is trying to do when they're actually trying to take actions to cap the long term rates for the U.S. government, which naturally would be on a trajectory to go much higher. And when you actually work to do that, and I think we're in the early stages of that, I think they still

5:35 have a lot more room to go of what they'll ultimately do to try to contain rates. The release valve has to be the dollar. And Bitcoin's highest correlation of any type of financial metric is a weaker dollar. And so I think right now we're kind of in the early stages of what I think could be the best macro conditions in Bitcoin's history. But ultimately, it will be when the Treasury or the Fed steps in with more size than they have yet to lower long-term rates. And I think that also is part of the thesis that JP Morgan sees playing out over the long-term here as well.

6:08 So, okay. So I think that's a good thesis on, you know, the reason why the timing is my question, you know, 511 million right now, we're at 80K, some people pointing down towards 72K, your average, what is the current average of your Bitcoin holdings? Do you know?

6:24 Just under 90K. Under 90K.

6:25 So- being able to buy and purchase sub 80 would be significant in being able to drop your average. Is this something that you see is coming in terms of a price for Bitcoin as we see it, maybe more pressure to your point? Do you think we're going to see an opportunity below 80K?

6:47 So we're structural Bitcoin bulls underwriting a long-term thesis, and we do not pretend that we have the skills to predict where Bitcoin will go in the short run. So we do think that a further dip from here as possible. But we think that's a game that we are not excellent at. What we do think we're excellent is understanding what's going to happen over four year, eight year, 10 year, 20 year time frames and just underwriting that structural thesis.

7:14 And so generally what happens is that if Bitcoin were to move weaker into a downward trajectory, it's much harder to raise capital. And so right now we have the ability to raise substantial capital while Bitcoin was under $ 100, 000. We'll take that all day and we're not trying to get too cute with our execution. All right.

7:34 Well, a couple, I guess my question is, is why more DAT companies? And we've got Saylor out there who has created what many people would say, maybe one of the most complex, but at the same time, very innovative financial products available. Why try to jump into that and continue to build on this DAT business?

7:58 So we saw an opportunity to do something that strategy was going to be unable to do, which is really turn up the amplification ratio to Bitcoin. And so amplification, what it really just means is a leverage ratio. But to note that we have preferred equity only, not debt. So how levered or how amplified is our return profile to Bitcoin? And so right now, Strive has about a 60% amplification ratio. Strategy has about a 25% amplification ratio.

8:25 And if you think about that, if Bitcoin moves up, we have a much higher beta to Bitcoin that they have. And the reason is not because they're doing a bad job. It's just that when you have 800,000 Bitcoin in your balance sheet, it is extremely hard to get that leverage amplification ratio higher. And so our belief was that they weren't going to be able to do it because of their size and that we were able to provide a more efficient amplified vehicle because of our smaller size. And so we raced in that direction. And that is why that in the course of a bear market, we've now, we've about 8X' d our Bitcoin holdings. We started with just over 5,000 Bitcoin. Now we have 40,000 Bitcoin. That has been substantial growth because of the demand and what we're doing.

9:10 And so I do think that there's room for other players. That is, so Strive is just perpetual max amplification, but done responsibly. There's other debts or Bitcoin treasury companies that are more focused on sharp ratio maximization, cash flows. And just like in investment management, there will be demand for these different types of risk return profiles. Our belief is that the biggest demand will be for amplified Bitcoin exposure.

9:34 So that is our strict focus. Okay.

9:37 You've got strategy out there buying another 22 million. And he made a statement. This was in a tweet that he put out. I'll show you guys. This was October 23rd, and it was an expose where he wrote, just resolving a few Bitcoin matters behind closed doors. Is this just an acquisition strategy or what's the answer? with that, do you think?

10:02 I don't know where he's going exactly with that one. But when you see what's going on at Strategy right now, their Bitcoin accumulation engine has slowed down a little bit for the last several months. Strive has actually been buying more Bitcoin for them than them. But I think they're Their bigger strategy here is that at that size, they are playing the institutional game. So they're talking to banks, they're talking to insurance companies, they're talking to major asset managers, pension funds, and that's the type of scale that they're ready to. And so it's a trust game. I'm sure these are behind closed doors conversations to try to unlock massive amounts of capital because of their size. Right now,

10:40 Strive is at a size where our sweet spot's generally more High net worth individuals is kind of the sweet spot for allocation to us. That's probably our average investor. But we do have pretty good support from some institutions. But as you grow up in size, like strategy is done, they're kind of growing up in times of the type of investors that they need to attract to get to the next level. And I do think that they will.

11:04 The challenge for them is that those large pools of institutional capital, they move slowly. But I think that strategy's balance sheet is basically unbreakable, and I think over time they will unlock that with success.

11:18 Well, you look at their current strategy right now, which is raising the stretch buyback limit to $ 3 billion. Would you say that this might be a warning sign?

11:29 No. So Strive, as an example, has grown ours. We launched our first preferred equity last November. We've grown it to over $ 2 billion of notional outstanding. I think that when you just zoom out a little bit, that over the course of over a year, there's about $ 15 billion of assets that have been sold through digital credit. And so I think that there is learnings as what are these products? How much volatility can you actually strip off of Bitcoin? And strategy is obviously trying to buy back.

11:59 They're trying to really minimize that volatility by being much more aggressive on their product, STRC. But I don't think it's a sign of Failure in any sense, given the fact that the industry has gone still from zero to well over $ 10 billion in just over a year, that would be a smashing success in any new type of financial product. But I do think that it's, you know, for them, it's kind of hit a little bit of its sophomore snag. For us, it's been a rocket ship.

12:28 We just IPO'd a new preferred equity literally last week. That's fixed rate. And strategies, STRC, are stated are variable rate. Our belief is that over time, there's actually going to be more demand for the fixed rate side than there is the variable rate side. But it's just still really early innings in what these products are and where the biggest demand will be.

12:49 I'm looking at crypto longs now losing the $ 404 million in four hours. Bitcoin briefly slips below $ 80K. This, I think, is going to create some forced sellers, but it's also going to probably create some new buyers. And with new buyers, that, of course, is going to change kind of the dramatic trend role of where Bitcoin is heading, especially against the dollar.

13:10 You guys announced your listing for sats right now available. And tell me kind of the comparison for someone that is saying, OK, I want to get exposure here. I'm looking at maybe going the strive route or I could be going over here and say maybe I want to go the master or the micro strategy route. What would be the benefit for you, especially on how you're paying against yields?

13:33 Yeah, so I think there's two decisions that investors need to make. The first is Are you shooting for price stability with the high income? And if you are, the best two products for that would be our SATA, S-A-T-A, our strategies, S-T-R-C. They are designed to minimize volatility around $ 100 per share. What we heard from several high net worth investors to the point that we felt like a bigger idea was that there was actually a greater desire for locking in income stability. So not locking in trying to get price stability, but just a higher income locked in forever. That for the average kind of baby boomer, that's looking to retire and just lock in an income that that was actually going to be a better product

14:16 market fit, just like how about 93% of bonds are actually fixed rate. And so when we were talking to people, what we learned was that a lot of these high net worth investors that want income, they understand the debasement trade. They generally understand Bitcoin. They just don't need the volatility of Bitcoin. They just want an income for the rest of their life. And so that's why Sats is fixed rate, pays 15% forever. But the price is very likely to be volatile or much more volatile than Sata or STRC.

14:47 It'll ultimately see where the demand ends up shaking out. We're pretty agnostic, actually, if which one ultimately has more success. It's not going to change our cost of capital much or what we view our long-term prospects. We just felt like this was a missing need and that the average person would probably prefer to lock in a little bit higher yield and lock in that rate forever.

15:10 You were quoted by Benzinga. This is, will Bitcoin hit 500K by 2030? You said maybe. When you look at what are the conditions that have to happen for that to occur?

15:23 Yeah, so there's a few. The first would be contingent on a view that we have that the dollar is going to go into a structural bear market over the course of the next couple of years. And that will be contingent on the Treasury and Scott Bassett actually remaining true to his word when he said, I am the House and going to take these actions. We actually believe him.

15:43 We believe that President Trump, J.D. Vance actually also won a weaker dollar. We also think that that's somewhat of a bipartisan position because whether you're a Democrat or Republican, there really is not a desire to actually fix the debt crisis. And so if you're not, then you really got to control the cost of borrowing in the United States.

16:05 So we think that the dollar will be moving into that structurally weak position that it really hasn't done in Bitcoin's history. It's actually generally for the last 20 years been going a little bit up. But in many bear markets, that's when Bitcoin's done the best. So if we actually had a structural bear market, so something similar to the early 2000s, similar to the 1980s, where the dollar index actually went structurally lower for a period of five, 10 years.

16:30 We think that that could ignite Bitcoin to going to $ 500, 000 per coin or above. We actually have three different scenarios. We have a lower growth scenario that's about a 30% CAGR. The base case is about a 50% CAGR, which puts Bitcoin right around $ 500, 000. Then we have a bull case, 70% CAGR. But we don't think that those probabilities are equally distributed. We actually would lean on the more bullish scenarios.

16:58 or the base case over the lower growth scenario. So we're very constructive on Bitcoin here. I would say the only thing that would really challenge it would be meaningful and substantial improvements in the fiscal situation in DC. But we think that's very unlikely to occur. Okay.

17:16 You got a couple of things happening right now. You guys are shooting for number two in terms of DATs. but you're number four right now. So how, what would be the strategy to try to get to number two before the end of the year?

17:29 So it should happen pretty naturally on our side. You never know what your peers are going to do. All right. So we're not, we're not operating in a vacuum here, but this last week we announced buying over 6,000 Bitcoin. We're now 1,001 Bitcoin away from becoming, taking the number two spot. And so at our trajectory, we would take the number two spot, absence one of our peers doing something even bigger, right? And that's one of the great things about our industry is that because the actual treasuries are Bitcoin, we actually would want to see other peers be buying a bunch of Bitcoin as well, right? That it's effectively, if we're all achieving excellence in this digital gold rush era, buying a bunch of Bitcoin, it obviously

18:12 supports the price of Bitcoin, doing it in our own ways, in our own kind of sources of demand, right? So I say if we didn't achieve number two, that would be the reason. But I think on our own trajectory, we're clearly on a pace to having much more than the number two currently has, which is 44,000 Bitcoin.

18:30 Matt, all of this, I think as you look at investors in general, Bitcoin is typically targeted as, hey, this is the alpha. It's going to be, you know, it's the NVIDIA or the SpaceX of an investor who's looking at crypto in general. Now we're starting to see tokenized stocks. You had Wells Fargo, Cisco, and a whole bunch of others now complaining that we're not necessarily going to allow that.

18:51 In fact, we started to see even things like this, where there's full page ads out there going after stockholders saying, Hey, don't, you know, help us support this. And then you look at what Jeremy Allaire is talking about, who is all in on this. Now that of course raises the question, when you look at tokenized securities, how crypto is being used, how blockchain is being used, this raises one, the awareness, then investors kind of go the route of, maybe I should invest in Bitcoin as well as leverage against this.

19:24 First of all, do you think we're gonna see companies finally get on board with tokenized treasuries, or do you think it's gonna continue to be a pushback?

19:33 So there is pushback from some companies, but there's also a lot of companies that are all in on tokenization.

19:39 Right, exactly.

19:41 Our view is that, and my view just as a general principle beyond just what I'm doing at Strive is that democratizing access to investment is a good thing. That people for years have been shut out from private markets. Obviously, when we talk about tokenization, there's a couple of different components to tokenization. One is publicly traded securities that are already available on NASDAQ or NYSE getting tokenized, which allows them to kind of move more freely throughout different types of exchanges and will open up additional access to be able to invest in the securities. That's kind of what we're seeing already. I think that is a great thing.

20:17 It'll improve the liquidity profile. There's already many market makers that are set up to kind of work on different same token that might be on different exchanges. That's what's been happening in crypto for years, where you have, whether it's Ethereum or Solana, whatever, name your coin, Dogecoin, and they're on all these different exchanges, and you have these market makers that are making these cross markets. So I think the functionality is there. I think it'll improve liquidity.

20:43 I think it'll be a great thing for capital markets. I think it'll be a great thing for the price actually stability over time, although it might be a little messy in the interim, unlocking new forms of potential leverage. I think it's a great thing. I think that is distinct from how much value that has to accrue to the underlying token that these are based on. So whether that's Solana or Ethereum. And I think the simplistic way to look at that is that these are networks. And if you are going to use their network, how much of these coins do you actually have to hold? How much Ethereum or how much Solana do you have to hold to use tokenized securities? And it's really not that much.

21:20 And so I think when you look at the market cap of some of those tokens that are more network tokens, I think that it's arguable that it won't accrue a ton of value to them. I do think it will accrue some value to Bitcoin, but I think Bitcoin is really just distinct in the sense that it's digital gold and it's really more based on the debasement trade. And I think that that will continue to heat up.

21:45 With that being the case, the debasement trade, you have BitBonds out here pitched as a solution right now to Trump's budget Bitcoin reserve strategy. And one of the things that the Bitcoin Policy Institute said that the bonds would pay a 1% interest direct to 10% of the proceeds into Bitcoin. This could save around 700 billion or over 10 years. That would be significant in a strategy like this.

22:08 My question is, do you think this can actually fix things like pensions and the debt?

22:14 So Bitcoin itself and getting Bitcoin exposure can fix the debt. It can fix the pension returns. When it comes to something like a Bitbond and the Treasury issuing them, I think it really just comes down to the type of demand and the demand sources that they can issue those into and finding that sustainable demand. And I think that's the hard part. In theory, the U.S. kind of issuing that and getting some direct exposure to Bitcoin and kind of creating a win-win, great product. I think that there's probably a lot of work to do to make that a sellable, sustainable product. And I will give you an example that has nothing to do with Bitcoin. But during COVID, there was a lot of people calling for the Treasury

22:55 to issue 100-year bonds. I was actually one of them. This makes a lot of sense. Interest rates are near zero. Turn this debt out 100 years. But what you're seeing, and I think even Secretary Besant at the time, before he was Secretary, was in favor of issuing more longer term debt. But there's not really the demand for that type of duration in sustainable size to have a sustainable issuance cadence. And so there's a lot of things that are good in theory. You have to find both the buyer and the seller. Obviously, the seller would be the treasury to have a win-win transaction. And my initial view is that it's probably difficult to actually achieve. But if they are able to achieve it, I think it's a

23:36 worthy endeavor to try because I do think that it could be a massive win-win.

23:42 I've got one for you to kind of wrap up today, and that is the concern around quantum and AI in general. Here's Shamath Palayapatiya.

23:49 This is one of the.

23:49 Biggest investors and VCs out there in Silicon Valley, claiming that AI is now aimed at crypto, if it were aimed at crypto. I still think that AI is probably going to find its way into banking more so than crypto. but that it could be literally aimed at Satoshi's wallet and could end up draining this wallet and even going short on the asset, which obviously would put a lot of pressure on Bitcoin. What's your take on this? Do you think this is a real vector in terms of a threat?

24:23 So I think there's already real solutions for AI. I mentioned to you before we hopped on that I'm actually recording this from Lugano, Switzerland, where I was at the Plan B conference and talking to a lot of the developers on Bitcoin. And there are great solutions today. It likely would take just a few months to roll out.

24:41 There's several different potential attack vectors from quantum. And so right now, the view is that we can actually take our time as a Bitcoin network and figuring out the best way to do this. But there would be some potential quick solutions if needed. My view on Satoshi's coin specifically, I have a couple of different views on that. But one would be, that very likely the first people to get access to quantum would be someone like a Google, a Microsoft, a very large company. You can't just steal someone's coins. If someone leaves their wallet on the table, you can't just go take them and they're yours. That is not how the law works. And so a large company stealing Satoshi's coins would be illegal. If a Google

25:28 did take them and put them in the hands of the government for safekeeping or something like that. I don't think that it's at the size and scale that represents a real material risk to Bitcoin. You think about 1 million coins, 1 over 21 million, that's over under 5%. There's obviously probably some other old wallets that would be at risk, but we're not talking about 50% of the coins that would be in this type of scenario unable to be upgraded, we're probably talking about 5% to 10% of the overall coins as a one-time risk that the community is going to have to decide what to do with those types of coins. My view is not to permanently lock them. I think that would be overarching on the Bitcoin network, but that wouldn't potentially prevent a a

26:13 large tech company to putting them in safekeeping, which I think is more likely than a bad actor getting access to quantum, which I think even when quantum happens, it'll be a long time before that technology is in the hands of the bad guys, in my view.

26:29 But are you at all worried about this almost bank run effect that you do see in an economy or into any kind of society where something is threatened people will start a bank run, it creates a sentiment waterfall, you get major selling, that entices other major selling, shorts get liquidated, longs are toast. What about that? Because you're talking about a situation that could really ramp up pretty quickly if that became public knowledge that this has been done.

27:02 Yeah, so Bitcoin is a volatile asset. I think ultimately it comes down to supply versus demand. But I think that's why you always have to be very careful with leverage. So not particularly for the reason you just highlighted, but because of the volatility of leverage, that's why Strive has no encumbered Bitcoin. We have no liquidation points. We could literally ride out a flush to a penny for Bitcoin.

27:24 I mean, you saw oil in 2020 went negative on futures, right? And then it rebounded and is now very, very healthy prices again, that those short-term types of pressures, I think are not something that worries me. What worries me is the long-term support and demand. And when you think about where we're going, I think there just will be a structural bid on scarcity. Those types of scenarios could result in selling pressure, but they also could result in the opposite of that. People would be trying to secure their coins and actually not selling it. And that what we've seen in the past is that hacks, so exchanges with Bitcoin have been hacked in the past. So you've had like the Mt. Gox hack as an example. These hacks

28:13 have tended to be bullish for the price of Bitcoin. Introduce short-term volatility, but if you actually zoom out around them, they tend to be something that ends up being more of a bullish catalyst than a bearish catalyst. And I think that if Bitcoin got beyond quantum, even if it got beyond quantum in a messy way, I actually think it would be bullish because it would kind of move something that was an unknown, scary thing to you knew what happened. And I think that it would actually be a bullish catalyst for Bitcoin on the back end of that.

28:43 Well, I mean, you've had good answers here. I think for investors that are out there looking at Bitcoin long term, that's the key. You guys have been kind of looking at more of a bigger picture here of where this asset is heading. So, Matt, it's been great having you on the show today. Thanks so much for coming in.

28:58 We appreciate it.

29:00 Thanks for having me.

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