Bitwise's long-term Bitcoin thesis and Q4 playbook

Transcript

Man, that but that's crazy. 1.3 million in 10 years or bullcase 2.9 million per Bitcoin GM. Good morning. Welcome to the Milkro Show, the daily crypto show where we turn market chaos into daily entertainment. I'm your host Jay Hamilton. It's Wednesday, September the 3rd. Last week, Bitwise dropped a bomb with their new report, which projects Bitcoin will hit 1.3 million by 2035 with an average annual return of 28% for the next decade, which would make it most likely the best performing asset in the world. We're going to dive into that, the assumptions, how they got to that analysis. But before we do that,

we're actually going to look at the macro setup because a big part of this report that Bitwise put out talked about macro. They talked about how US debt is projected to rise 97% from where it is today and up to 166% by 204. And you guessed it, Bitwise thinks that Bitcoin is one of the best hedges against the neverending train that keeps going of US debt. But of course, what about now? But what about the rest of this cycle and the rest of 2025? We're going to do a little quick round table. BTC for the east versus soul. Which one is going to outperform for the rest of 2025? To break it all down, we are joined by Ryan Rasmusen, head of research at Bitwise. And we're also joined by Jesse Eckle, founder of OPAC

Ventures and fellow podcaster and YouTuber. Before we jump in, if you guys want a quick five minute read every day to keep you on top of the markets, maybe you don't want to listen to the 40-minute show every day, you should make sure you subscribe to the Milk Road newsletter. Hit the link in the show notes and subscribe today. We've got our September market roadmap that we just put out. So, if you're not subscribed, go subscribe. 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 KGen, the verified distribution protocol, changing the growth game. with that. Jesse Ryan, welcome to the Milk Road Show.

>> Good to be here. >> Happy to be here. >> Neither one of you knew who to talk who who to talk first. Let let me let me redo that. I'll do you one at a time. I'll do you at a time. Okay, with that, Ryan, welcome back to the Velcro Road Show. >> Happy to be here. Thank you, >> Jesse. Welcome back as well. >> Glad to be here, too. >> It's uh it's exciting to get two guests on the same show. We're exploring this new format. Everybody listening in, let us know what you think. Uh, I want to start with quick market check. Uh, Ryan, you go first. It's been a while since we got you on the show. I don't think we've been on the show since June. Um, how are you feeling about uh, sentiment positioning catalysts uh, heading into September here?

>> Yeah, I'm feeling really great. Of course, you have seasonality typically in crypto and really risk assets as a whole. It's common in equities and other markets and so September typically is weak from seasonality perspective. But if I set that aside, I think there's a lot of strong tailwinds that the market is setting up really, really well for the end of the year and into 2026. So, feeling very excited about where things are at today. I think we'll have a little bit of lull and then I'm really excited for Q4. >> I love it. I love it. Jesse, how you feeling? >> I'm about the same. Uh we have the seasonal risk of September. Uh but something that I've been thinking about a lot lately is is just how bearish everyone is for September. Like going into September, everyone's like super hyper bearish. And that almost makes me

want to flip the opposite direction and think, you know, maybe this is one of the rare Septeers where we actually finish in the green, especially because we have rate cuts. And I still think although it's like the odds are like whatever 80 90% right now, I still think nobody's pricing them in in the way that like they will get priced in when we actually get rate cuts because I still think everyone knows we have kind of a a little bit of a road between now and the middle of September with we have CPI PPI coming out uh next week and then we have some more data prints. And so I I think until up until the moment that Jerome Pal comes out and says, "Hey, we're actually getting rate cuts." I think the market is still kind of hedging. And then once we actually have that happen,

I I think it's really off to the races. If we get a rate cut middle of September, I think we could potentially end September in the green, unless one of these data prints just like nukes us, you know, next week. >> I like that. I actually I really really like that. I It feels like this is an abnormal year to say the least. And I don't surf, but I was thinking as you were speaking about like what analogy would would capture uh h how I'm feeling with what you said. And it's like we're we're on the water and at any mo any moment like tariffs or interest rates or inflation prints could lead to like a huge swell that we can just like ride off into the sunset or might like capsize the boat. And so it feels like it could go either way. But uh I like

that surprise to the upside that you're you're thinking about. I definitely agree that the consensus right now is quite bearish just around everyone keeps showing the seasonality chart of Bitcoin and how every September Bitcoin is red and I think I've just seen it so much and it's such we're going to talk a little bit about cycles in this episode and one thing that I think everybody forgets is like we've only had three of these cycles like it doesn't necessarily mean that it has to repeat itself. Well, I I think it's also the stock market too, though, is is seasonally weak in September. So, it's not just like a cryptosp specific thing. Uh, but I but I do kind of feel like some of the the PPI print and some of the other

events that have transpired over the last couple weeks maybe pulled forward some of that bearishness. And so, you know, like we didn't come into September hot. We came into it really really, you know down. >> And so, that makes it a lot harder for us to end in the red. Like we'd have to go I don't know what we came into September at. I was like 108 109. So, you know, we'd have to we'd have to have a pretty bad month to to end red and that's kind of why I was hedging to the upside. Yeah, it's a great point. Okay, let's let's jump into this report that you put out recently, Ryan, on the Bitwise team.

We were chatting about it before the episode. Incredible report. We'll link to it in the show notes if everybody wants to go read it. Uh before we talk about the prediction of 1.3 million Bitcoin by 2035 uh and exactly how you guys got there, the you started this report with some macro assumptions. The first line, one of the first lines in this report is Bitcoin is first and foremost a macroeconomic asset. As such, macroeconomic conditions are critical to our long-term capital market assumptions. So you're really framing that the macroeconomic setup is so important to understand in order to understand the Bitcoin thesis. So I want to make sure that everybody understands

this macroeconomic setup where we are the changing world order where we're going. Uh can you break down what what are what are these these macroeconomic factors that weigh into Bitcoin so heavily? >> Yeah. Well, I think that's exactly right. Bit Bitcoin has graduated into this macro asset, which is an amazing thing for investors and something that we're really excited about and partly what we believe will drive it to these new all-time highs year after year through 2035. I think we've spoken about some of those things already when talking about our short-term outlook for the market. We talked about inflation, we talked about interest rates. So, those are two of the elements of course that play a role from the macro landscape. But I think zooming out the things that we considered when we built

this report are things like debt, federal debt in the US, debt abroad as well with other central banks, deficits, debasement of fiat currencies, the role of the US dollar globally of course that's been uh something that has been largely under under uh the m the magnifying glass here for the past year or two or longer. And all of these things play a fundamental role in how investors think about macro assets. And a good framework for what a macro asset is is something like gold. And of course, Bitcoin is often referred to as digital gold. So those are the things that we think play the biggest role. And uh you know, we're not alone in this. Of course, Lyn Alden, Ray Dallio, others talk about this as well, but that's kind of the framing that we use to set this

report up. I I want to go through a few of these uh a bit more specifically because you did a great job with some charts and some stats here that are just mind-blowing. Talk to us about the US debt and some of these stats here. Yeah. Oh, definitely. One thing that I found super interesting, we were digging into this is that the US government has these like really interesting dashboards on their website about how horrific the debt in the US has gotten. Like most of these came from a US government website, which is kind of blew my mind. Do you think they'd be like sweeping under? >> Yeah. Yeah. Somebody I don't know. It was really funny. Someone inside in one of the government departments loves data and visualization and was like what if we just and then it got through all the compliance checkpoints and whatnot. Um

but yeah, these stats are really really interesting. Okay. So to to set the framing here, we're approaching our 250th 250th birthday as a country. The most alarming stat here I think in my mind is that in the first 200 years the US accumulated 650 billion in debt and today that number is 36.2 trillion. It it's such a huge climb in the last 50 years that I can't even do that math mentally uh out of fear of getting it wrong. It's it's an incredible step function in debt and it's spiraling away as we've all seen. You know it's it's talked about everywhere. half of all of that debt, the 362 trillion, 36.2 trillion was accumulated in the past 10 years. I think if you think about what

this means to you as an individual citizen of the US or individual person, that's more than 100,000 worth of debt for every citizen. Now, Americans love debt, but I don't think most Americans want to have a 100k worth of debt on behalf of the US government on top of their mortgage, on top of their car loan, on top of their student loans and credit card debt. When you think about how do we get out of this hole, one thing that certainly doesn't help is that US debt now stands at 120% of GDP. That clearly is a backwards formula for escaping this scenario that we're in. And then of course what that means with all this debt and with interest rates where they are at today, US debt payments or interest on US debt is around a trillion

dollars per year. It's the fourth largest line item in the US budget. It's really really really insane and we don't see any way of reigning this in. I >> I I just feel like shocked like you just listen to this stuff and you're like is it over? Like you know like it does it does lead to a natural question of like is the US approaching a doomsday scenario like or where do you think this plays out and and why is Bitcoin so important in this in this world? >> Yeah. Well, you know, I think it's not necessarily a doomsday scenario. I wouldn't say that our view is that the US government is going to uh, you know, spiral into oblivion and no longer be around in 20, 30, 40, 50 years. But I do

think what this does is it turns a light bulb on in people's heads and investors heads and says, "What should I be investing in to hedge against this?" And that's exactly why gold just hit an all-time high, I think yesterday. Bitcoin is approaching all-time highs and and within 10% of all-time highs because investors want to know, they want to see a way out of this. And Bitcoin and gold and macro assets that hedge against things like this and that have hedged against things like this in the past are assets and investors like to hold in these times. So, I don't think that we're going to see the US government crumble. I do think investors are more and more aware of this every single day. And that's why you have people like Ray Dallio, some of the most influential investors in the world,

saying that investors should hold 15 20% hard assets like Bitcoin and like gold. >> Jesse, I want to give you a chance to jump in, but first I just want to bring up one more chart on the macro side, which was we were sold uh that when Trump came into office, he was going to make a change here, right? Stop the spending, Doge, government efficiency. You got a chart here. talk us through what has happened so far since Trump has come into office. Has he actually cut spending? >> Uh yeah, let me let me just break this chart down real quick and then hand it over to Jesse. What this is showing here is that uh actually in the first 80 days since taking office, uh Trump spent more than Biden in 2024 or in 2023, in the

first 80 days of those years. This is actually published by the Wall Street Journal. So like not a cryptospecific phenomenon that we're the only ones looking at this, of course. And so, yeah, I would love to hear Jesse, your take on on these kind of data points. >> I mean, I I think that going into it, I think there was a genuine belief that the government could, you know, do some sort of a austerity measures that could maybe pay down the debt over time. At least I felt like on X and everyone I talked to, like everyone was really excited about like the potential for this to happen. And I think this was like a genuine belief of theirs that they could do, but then they kind of realized uh getting going that there's just absolutely phys like no no way no path forward uh to to getting that

happening. And I would give it I would do it like a college students in $10 million of debt and they work at McDonald's, right? You know, like there's just absolutely no way they could save their way out of debt. And so what the the Trump administration and and Scott Besson, what they've talked about is I think they've completely flipped to there's no way we can save our way out of this debt. the only way is to grow our way out of this debt. And so that's where you get Besson always talking about running the economy hot. And so the idea would be that that McDonald's uh worker is now saying, "Hey, I'm I'm not I'm not going to save my way out of debt, but maybe if I start this business and I go do this and I do this, maybe somehow after all that, I

can get my way out of this debt." And I think that piece is really important for where we head next because if you look at the incentive structure of the Trump administration right now, it is to get things going at like max velocity so that we can somehow grow our way out of this debt. I think that's their intention. I think that's what they're trying to do with deregulation, uh the changes to the uh supplementary the supplementary leverage ratio, uh the rate cuts, all of these different things. Uh now they're talking about housing and there's actually like uh around 11 trillion in unlocks if they were to like uh allow people to tap tap into equity and all that. All these things uh I I think are their plan or their path forward to run the economy hot. And I think that is going to have a

huge boost for for asset prices going into you know the rest of the Trump's term. >> Yeah, I think that was a beautiful and horrific mental model. uh that captured it so well like the if the US government is a McDonald's or a college grad working at McDonald's with 10 million in debt and making $10 an hour. >> Oh boy. Oh boy. But the thing that so which which sort of goes to and and I like this uh this back and forth we're going to have throughout this conversation of like kind of like short-term rest of 2025 versus the next decade. And from a from a short-term perspective, that's why, you know, Jesse, you were on the show last week and we talked so much about how good the setup is right now. We're not sure about

September, but how good the setup is, assuming we get the rate cut and we go into the rest of the year with like really like a bit of a Goldilock setup from a macro side. But then when you look at the when you zoom out and you look at the next decade, the thing that that stands out to me in the report you guys had a line where you said we believe these macroeconomic trends are easy to forecast and that's very interesting to me to say that these are easy to forecast but it's true because you know as Lynn nothing stops this train like this is there is no no government is going to choose a different path in the next decade. This is seems to be the only playbook that they have and maybe for a minute they

tried another playbook. But hey, grow our way out is the only way. So if it's easy to predict it, then all then assets like Bitcoin just feel so much stronger to be able to succeed in that world. I I want to touch on another point that you talked about in this report that I think is really important to understand is um if Bitcoin is going to become a reserve asset, is the US dollar going to become less of the reserve asset? Talk to us about what is going on with US dollar dominance right now, Ryan, and and and gold. We you already mentioned gold reaching all-time highs. You got a few uh a few things to touch on there in the report.

>> Yeah, certainly. So if you if you think about the US dollar as a global reserve asset and as the share of central bank forex reserves, it's been falling year-over-year for the past 20 plus years. Something like the past 25 years, it's gone from above 70% to below 60%. Now that sounds like a pretty small decrease, but when you're thinking about the US dollar as a share of global foreign exchange reserves, that's a big deal. And the natural next question is well what's filling the gap right what is what is filling up the other side of this chart when you have US reserves going down and the answer to that is mostly it's gold right so what you see

is central banks and this chart shows it well is net net gold purchase by central banks you see them selling dollars and buying gold so if you think about what's driving the price of gold higher it's more demand than supply that sounds very similar to assets like Bitcoin. And so when you have foreign governments which have some of the largest uh you know capital coffers in the world selling dollars and buying gold if some of that even a small portion of that flows to Bitcoin as an alternative store of value or a digital gold that they want to hold in place of US dollar reserves and that should have a similar effect on the price of Bitcoin. It is it when you look at these charts, it just feels so obvious the way everything is going. Uh

and I want to jump into the Bitcoin prediction for 2035. But first, there was one other thing that I want to call out on the macro side and then we'll jump in. You you you you addressed the regulatory environment in this report and you asked a great question which is the central question investors should ask about regulation is whether the recent positive tilt is a long-term secular trend or a short-lived partisan swing. And I had never I never really heard anybody put it that way because I think we all assume that it's long term or just like oh yeah of course this is long term. But it is a good point to ask this question like is this actually long term or is this just a change in administration and four years from now

we're gonna have another swing. >> Yeah, that that's a great question. It's something that we actually get asked all the time speaking with investors. We, you know, I spend a lot of time talking to RAS, hedge funds, alternate worth in uh individuals and others in the US and many of them who don't pay as close of attention to how dramatic this this shift has been from DC in regards to crypto and that it's not just Donald Trump signing executive order to create a strategic Bitcoin reserve, which is the headline that they see. When you start to peel that back and and look underneath everything, you see things like the Genius Act, which is stable coin legislation that passed through the Senate with bipartisan support, passed through the House with bipartisan

support, and was ultimately signed into law by Donald Trump. I think the signing into law of bipartisan legislation is the thing that cements in our mind that this is a long-term trend, not just a top-down forced thing through executive orders that could be just as easily reversed by the next president. The Genius Act was first. I think the Clarity Act comes next. And we've also seen this through other agencies like the CFTC, like the SEC, like the Department of Labor. So, in our view, this is a long-term shift. It's not just a short-term pivot to uh make voters happy about promises made on the campaign trail. And for us, that cements

crypto as a that cementss crypto in its place as a macro and global and institutional asset in a way it hasn't been in the past. Why do people invest in real estate? Because it spits off cash flow. But I'm not here to manage rental properties. That's why I'm looking at Figure Markets. Their new democratized prime product backs your money with real cash flowing assets and returns up to 9% APY. It's the first real world asset borrow lend pool built for everyone, not just institutions. Ready to lend like a bank and get more than the 5% A is offering you? Download the Figure Markets app today and get 9% on your idol funds. Go to milkroad.com/figuremarkets.

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target. It's a capital market assumption. What What's the difference? What does that mean? >> Yeah, it's a great question. So, long-term capital market assumptions are something that major asset managers put out for every asset class. Black Rockck does this, JP Morgan does this, PIMCO does this, which is, you know, one of the big bond companies in the world. And they take a step back and they don't look necessarily at the next year like 2026 or 2027. They take a step back and they look a decade out from now and they estimate a number of different macroeconomic factors. They estimate a number of market specific factors. And importantly with capital market assumptions is they don't just look at price. What you use capital market assumptions for as a portfolio manager

and an investor is thinking about overall portfolio construction and diversification. And so what's important in those conversations in those formulas are things like correlations between the asset classes you're putting in your portfolio. The level of volatility for each asset class because ultimately you're trying to optimize for riskadjusted return. So capital market assumptions say what do we think the growth rate will be for this asset over the next 10 decade? What do we think its correlation to other assets in the portfolio will be over this next decade and how do we think it will perform from a volatility perspective and they put all of that into a a you know a beaker or whatever and they try to come up with the best portfolio allocation and no one has put out Bitcoin capital market

assumptions ever before this. It's been they exist for equities, they exist for real estate, they exist for hedge funds, they exist for bonds and now they exist for Bitcoin. And that's why we're so excited about this report and we've been asked about this report over and over and over again since the Bitcoin ATPs went live because portfolio managers want to know how Bitcoin fits into the overall picture of their portfolio. So for all of us retail investors who are not sitting in the seat of professional investors, these types of reports are very necessary for institutional investors to make decisions around these types of assets. So deep bow to Bitwise and the whole team for putting this out and getting this in front of so many people who have not bought Bitcoin yet and who have massive massive amounts of

cash that they are managing and they are considering getting into Bitcoin with uh okay let's jump into the the prediction here. You guys have I I'm sharing on screen for everybody watching. If you're not watching you might want to pull this up because this is the chart to look at in this report. So this is Bitwise's Bitcoin valuation framework which shows how you got to this 1.3 million base case. I should mention this is the base case. The bull cases 2.9 million for everybody that wants to be a bull out there by 2035. Okay, Ryan, walk us through how you got to this target.

>> Definitely. So what we did was we took a step back and looked at all the different models for forecasting Bitcoin price out there. the power law uh model, the stock toflow model, a number of other models. And we thought to ourselves, what's the best way to forecast the price of Bitcoin? And we ultimately landed on a total addressable market or TAM exercise, which basically says, what are the markets that Bitcoin could penetrate or could disrupt or could capture market share from over the next decade? And we broke those down into a number of different asset classes. is these are things like offshore wealth which today is an 11 trillion market or national treasury reserves which we just spoke about which

is a $13 trillion market and then much larger markets exist like institutional investment assets these are those assets managed by institutional investors and we said okay how much of these markets do we think Bitcoin would penetrate in a base case and then we ran the scenario analysis for bull case and bare case as well but importantly I think what a lot of investors miss when they do this kind of exercise and this is why long-term lenses are so important is that the the value of the store of value market or the gold market today is not going to be the same as it will be in 10 years. And so when you're thinking about how large will Bitcoin grow if it penetrates these markets in 10 years, you have to forecast forward the size of these

markets for that 10-year period. If you do this exercise backwards and you think about gold, gold today is like a 26 or 27 trillion asset. It was not a 26 or 27 trillion dollar asset 10 years ago. So that's why it's important to to run these markets forward 10 years. What we did is take the historical 10-year compound growth rate and then just applied that going forward. So this assumes the same level of growth across these asset classes as has occurred for the past decade. And then what we said was how much do we think Bitcoin will capture of these markets? I'm not going to read through every number here on the on the slide, but I think, you know, our base case, the most interesting one to me that will resonate with most people is the we we believe that Bitcoin will

at least capture 25% of the store value market, which today is primarily gold. And I think it's important to note that it doesn't just take market share from gold today, but that market expands over time. And some people would be surprised to to see this data point because I would, but the compound annual growth rate for gold over the past decade was 13%. It's been the best performing asset from that perspective for the past uh decade. And so ultimately what that leads you to is what's the market value of Bitcoin at these different penetration rates across these different asset classes. And in our base case, assuming that Bitcoin takes 1% of institutional investment assets, which would be something like one uh two trillion, and assuming it takes 25% of

gold, and assuming it takes 2% of global winses, the price per Bitcoin would grow from 107,000 when we struck this model to 1.3 million. And that would lead to a compound annual growth rate of 28% which as you can imagine and we'll see later in the port is significantly higher than every other major asset class that produces long-term capital market assumptions. >> Jesse, how do you feel about this? This feels like a very simple and incredible way to cut to get to a price prediction to me. >> Yeah. No, this is really good. Um, if if you were to ask me before I saw this report kind of my guess on where I would assume Bitcoin would be in 10 years, I think maybe my guess would be a little bit lower than most people. I would put

it around 700 to $800,000. Just kind of based on its current growth and like the rate it's grown each four years or whatever. But looking at this, it's really hard to, you know, argue with these numbers. In fact, some of these numbers almost feel kind of low like >> you know. >> So when it's conservative >> Yeah. So um looking at the percentage numbers I'm like okay yeah I could definitely see that. I could I see a lot more than that. Um yeah I mean man that but that's crazy. 1.3 million in 10 years or bullcase 2.9 million per bitcoin in 10 years. I I think we all kind of know Bitcoin's going there like eventually for sure. in 10 years that feels crazy. But like I said, it's

really hard to argue with these numbers which honestly in some in some ways feel conservative. >> Well, and to further point out how conservative these numbers are, you guys at the end of your report, you mentioned the other typical models that are used to project Bitcoin's price. And there's three other models that you mentioned and their predictions are between 1.5 to 11.6 million by 2020 20 by 2035. So you're actually you're the most conservative model in terms of price predictions for Bitcoin by 2035. And as as Jesse said, when I look at this, the big one that stands out to me is institutional investment assets is projected to be 216 trillion by 2035.

And your base case is that only 1% of that is going into Bitcoin. Only 1%. That is quite like I think that is very achievable. And I think it's very likely that it's more like close to 5%. And that's a that's the biggest asset class that's mentioned in here. And that's a massive massive difference in terms of how much that could push everything up. It's just it it seems so obvious like all these things of course emerging market currencies. Yeah, of course they're going to move their money into Bitcoin. We have team members in Argentina. They don't hold their own dollars. They don't hold they don't even want to hold US dollars anymore. They hold Bitcoin, right? Store of value.

I'll get offshore wealth. National treasuries. Yeah. Duh. US corporate treasuries. uh global remittances. I don't know so much about that one, but that's such a small one that maybe it doesn't make such a big difference. >> I think Go ahead. I was gonna say I think for me looking at this, it's hard to imagine because you're basically saying between now and the next 10 years, one of these one of these years is going to be nuts cuz I don't know if it's going to be uh or or it's going to be like expanded growth than what we've seen, you know, um we're going to see an up uptick in the momentum of Bitcoin at some point. And but if I think about it uh just from like uh institutional perspective most people think a lot of these institutional flows are coming from like you know big institutions when

in reality at least from what I've seen maybe you know a little bit more about this than than me is that a lot of these ETF flows are actually retail driven or they're driven by like financial adviserss on retail's behalf and actually institutions are still really really slowly dipping their toes into crypto and it's just going to take a long time but when that when that starts accelerating it's going to get out control. And then on the other end from a retail focus, if you look at like demographics, like most of the people buying crypto are like the younger generation who just currently doesn't have a lot of wealth. And the older kind of boomer generation, they're sitting on like all the wealth, but they're not really buying crypto. But the thing about them is like eventually they kind of will die. They will pass away. And

when they do that, that wealth transfers to that younger generation and they're going to use it to go buy Bitcoin. So when when you add those two things together, it does it does feel really obvious, but I'm just trying to think like at what point do we see this kind of increased momentum start to tick up and I don't know if you have Ryan like an indication on that. Like when do you kind of expect things to really start accelerating over the course of that 10-year period? >> I think that's a very accurate assumpt uh uh observation of how the market's going to move over the next decade. And I do agree with you that a lot of the flows we've seen so far have just been retail and very early adopters. One one anecdote that I think proves that is most of the major wirehouses. These are

firms like Raymond James and Wells Fargo and Morgan Stanley haven't approved their wealth managers, which are some of the largest wealth managers in the world. We're talking trillions of dollars in assets they control. They haven't been approved to just outright allocate on behalf of all clients to Bitcoin. Some have been approved to allocate. If their client calls them and says, "Hey, I want to buy Bitcoin." Then they can go buy Bitcoin ETFs. Some of them can use model portfolios for ultra high net worth clients over, you know, x amount of of net assets and invest a little bit into Bitcoin. But majority of financial advisors, RAAS, and institutional investors, as you mentioned, Jesse, aren't able to access these markets yet. So, the flows that

we've seen so far, which have been record-breaking, and which today sit around 200 billion in assets and Bitcoin ETFs, is just literally the tip of the iceberg. And I think a lot of people don't understand that. And I do agree with you that the momentum is just going to accelerate once those unlocks happen. Like, we've only seen the first wave of adoption. I think the second wave will be larger than the first, and the third will be larger uh than the the first two combined. So, I do think that will drive prices higher and and it's a large, you know, element of our assumption here.

Uh, and and I love what you said about, you know, the older generations that control majority of the wealth typically are more riskaverse and are skeptical of things like Bitcoin, but eventually that wealth transfer will happen. And I can tell you that if I were to inherit a million dollars or $2 million right now from the next generation, I would immediately sell the, you know, S&P 500 or a large portion of that and buy Bitcoin because, you know, that those investors, the older generation are invested in traditional 6040 portfolios. And we know by taking a step back and looking at all these macro factors, the 6040 is not the way of the future. So I think that's exactly right. The wealth transfer will accelerate this. The institutional unlocks will accelerate this. Government purchases and

corporation purchases are just fuel on the fire. >> What does that mean? Are we going to have like a disconnect between Okay, so imagine this playing out with this younger generation getting that wealth. They're selling the S&P 500. Is the stock market now going down and cryptos going up at the same time or like how does that actually play out in your guys's head? >> That's a great question. I there's so much passive flow into the S&P into equities into the stock market and there's a lot of institutional investors who are mandated only to invest in those things and like particularly can't invest just like there's investors who are mandated to only invest in bonds and private credit etc. So, I think there's enough passive flow and restricted capital that invests in equities uh that will continue to drive demand higher.

But I do think that's why Bitcoin outperforms stocks, both US and global stocks and bonds and other asset classes over the next decade is because there's more capital directed into Bitcoin than those asset classes on a kind of net market cap basis over the next decade. So, what's the new you get a let's say you get a million both question for both you. Let's say you each get a million dollars from an inheritance, right? Uh shout out to Aunt Mildrid. Uh and >> what are you doing with it? You're not you're not doing the 6040 anymore. What what do you what's the new 6040? What's the new way for retail investors to think about this?

>> Okay, if you're asking me what I do, like I'm I'm all in on crypto. So, I I would go all in on crypto, but I wouldn't recommend that for like I don't think your average person is going to do that. Um, I think maybe your average like millennial is going to buy some like Tesla. They're going to buy some like weird kind of GameStopy kind of meme stock stuff. Um, it's going to be kind of these newer companies that they're familiar with. A lot of those legacy companies maybe get capital pulled away from them. They're gonna probably put some They probably will leave some in like some indexes just because, you know, they're gonna think they're gonna want to allocate and see.

>> But you would you wouldn't leave any in >> Yeah, but but I'm fulltime in crypto, so I wouldn't do that. But I'm trying to think from like >> No. Well, because I don't have that right now. >> Even I would I would leave some I would leave some in an index. Like I wouldn't go full full crypto. I would leave some in an index. >> Well, I I have gone full crypto. So But but I but I'm like uh that's weird that I don't think that's normal. And then I think there's going to be probably a good chunk of the portfolio is going to be in crypto and like Bitcoin probably dumb stuff like XRP and like it's going to be weird. It's going to be a weird time time period where people are going

to allocate into some I think some crazy things and it might take a couple years for them to kind of realize where that capital should go. I don't know. That's a really hard question to answer. >> Yeah, I it's a great question. It's a really fun thought exercise and it's I feel the urge to also say I would just go all in on crypto. Um certainly uh and and you look at numbers like the the growth of crypto if you were to go all in on Bitcoin over the past decade, you would have done so much better than the other other asset classes. I think that uh I would take some approach probably of like of one-third into Bitcoin and then another probably like 15 to 20% into assets like Ethereum and other crypto assets and then I would probably

split the rest like 25 into real estate and equities. Uh just because um you get some cash flow producing assets, you have some diversification between the crypto and the and the stocks, but I would probably be underperformed by Jesse for what it's worth. So that's the nuance. >> So what's what's going to be the new 6040? >> Do you think like and and is anyone pushing a new 6040 that you can see Ryan on your end? Like I don't see Jessica, I don't know if you I have not seen I know that the 6040 is dead and I and I wouldn't do it anymore and I wouldn't recommend it to anybody, but I haven't seen a new you know version of that take the narrative.

>> I think Ryan's on to something when he says housing. Like my generation wants a house more than anything. It's like the golden goose of So, so you know, I think >> generation, aren't we all the same same generation? >> Yeah, our generation. >> Our generation. Everyone wants to own a house. So, like I think, you know, a good chunk of that's going into they're buying a house. Um, and then they might buy a second house just to have a second house cuz they've not had a house for so long. And so, maybe it's like a a real estate, crypto, stock. I I don't know because like when I talk to like an average person, I'm trying to think of an average person getting this money.

When I talk to them and they hear I'm in crypto, the only thing they ask me, they don't ask me about Bitcoin, they don't ask me about ETH, they don't ask me about altcoins. They literally just ask me about XRP. And I'm talking I've probably had 300 conversations and every single one is, "What do you think about XRP? That seems like a really small one that has a lot of potential. Every single one of them thinks it's going to go to like $1,000, $10,000." And even after I have like a 20-minute conversation with them, they still don't understand. And so I don't know like they're they're not as like financially sav this generation is not that financially savvy right now. I don't know if that changes when they get money. Um but yeah, it's kind of hard it's kind of hard to estimate where they're going to put money. Well, let

let's be clear. I don't think any generation has been financially sav savvy in terms of a mass standpoint. The biggest difference is they didn't have they had a little bit more protection because it was so hard to to invest in the past. Whereas like now it's too easy to invest in anything. And you have incredible marketing quite frankly where XRP to 10,000 is something that people actually believe is a real thing even though it's complete nonsense. Well, what I think the difference is between previous generations is previous generations did kind of trust what their parents told them of like you should put a little bit in S&P, you should put a little bit in in these growth stocks, a little bit in gold or whatever. And I think the newer generation has become so dis disillusioned by the system that I

think that does add a wild card like a little bit more risk-on gambling uh kind of coloring to it where they're going to be a little bit outside of the lines because they just don't trust what you know the past generations have done. And that's where I kind of think it is a little bit more chaotic uh going forward than it has been in the past. And we've already seen that playing out with like just GameStop and all this kind of crazy stuff h happening over the last couple years. >> Yeah, I I think that's there's so much disillusion happening. I saw something really uh funny and also depressing on on social media a couple weeks ago that said uh something like, you know, boomers will tell millennials they just need to work harder. And then it was a it was a picture of like a Zillow house

from like the 50s that was bought for like $8,000 and is now worth like 1.5 million or something like that. And so I do think that drives the the mindset of younger investors. It says, "Look, I'm not going to be able to buy a $1.5 million house. I could if it was $8,000, I would have been happy to buy one. Maybe I'd buy a second one as a rental property. But what I can do is buy some Bitcoin. what I could do is buy maybe one or two ETH or I could buy whatever it is like a thousand XRP because the unit bias is so low and if that goes to 10 then all of a sudden you know I've made a bunch of money and and I do think that ultimately hurts investors and is one of the main reasons why you see so

much excitement around XRP. That's why for starters fans of indexing the crypto market so that you don't have like an outsized allocation to something like XRP. But if you want to hold, you know, the the a broad basket of assets, you can you can do that. But Rick Edelman, back to the question uh about what's the what's the new 6040? Rick Edelman's like a very well-known financial adviser in the RA space, like one of the most successful of the past generation and controls a huge amount of assets and and influence over the space. He recently called the mo, you know, the new modern portfolio having as much as 40% crypto in that portfolio. Now, majority of that would come from bonds because bonds just don't perform the way that they used to.

They don't perform as a hedge the way they used to. Uh, and of course, there's concerns about US debt and other and the ability to repay that debt and things like that. So, I do think that you'll start to see a shift in that. But to Jesse's point around investing has become too easy to just buy anything that you see. I do think that's a scary thing for investors uh of a younger generation who maybe are more risk uh seeking and sometimes I think about what tokenization will do for that and it worries me because if you think about today it's at least restricted to public companies who are regulated by the SEC have to public publish quarterly filings and things like that. But then you start thinking about what happens when private companies can issue equity that trades on blockchains that's super easy to

access for risk-seeking millennial and in and um Gen Z investors and they're like I got to I got to get in on anthropic or I got to buy uh OpenAI equity and they pay some absurd price for it and they just don't understand what they're investing in because those tokenized shares are priced at like $2 a share or something like that. So, um, yeah, it's it's it's interesting where we're headed. Um, but I do think, you know, investing with a broad portfolio mindset is extremely important. And I don't think they they should be teaching that in like middle school and high school and they just simply, you know, >> Yeah. Like, can we can we meme into existence like a uh 50% of your portfolio should be Bitcoin like or or

even say all if if if every if when this wealth transfer happens, what is it? 70 trillion 80 trillion that's going to transfer something like that something that's going to transfer from the boomers to the next generation and Mildrids are going to going to pass on the inheritance. Uh when that happens, it feels like, hey, just keep it simple. Just buy buy Bitcoin with at least at least half of your stack and then don't even think about don't even think and then real estate with some of it because you know you need everybody probably wants a house as Jess said. Holty agree.

And then and then maybe play with the rest of it. You know, maybe 30% real estate, 20% 10 to 20% go take some risk. Go don't buy XRP, but buy something else that you think might go up. Uh, okay. I want to I want to shift to the the rest of this year. So, we've been talking decade mindset the rest of this year. Uh, two questions. One, um, Jesse, you talked about this last week. Tell share once again summarize your when do you what's your cycle thesis? When do you think the cycle ends? Share that because I want to hear what Ryan thinks and how he thinks about cycle.

>> Okay. My my cycle thesis is really strange versus everyone else's. I actually think that we're going to have a two-legged cycle that's going to end at the end of 2026, not like everyone expects uh at the end of this year. The reasoning behind that has to do purely with liquidity and all the liquidity boosts coming in 2026. Uh we have Pal coming out of office in uh late spring of 2026. We know we're going to get rate cuts. Trump is like determined to get rate cuts. Uh we know we're having the the changes to the ESLR, so uh that's coming. I don't I don't know when, but maybe early next year, and that's going to free up bank reserves, more credit, more lending. Uh that's that should bring down the the 10 year and the the 30-year and which is again more credit

and lending. Um you have uh a lot of other changes like the Clarity Act, you know, regulation, etc. The dollar is just really bullish for 2026, and I think if you look at past cycles, um a lot of it was tied to year-over-year liquidity growth and uh we just haven't had that. We we like straight up have not had that since 2021. And that's been, you know, the fastest rate hiking cycle in history is is what we did over the last couple years. And so everything's been muted. The business cycle never took off. Like it's just been a weird couple years. And so I think that's actually going to bleed into 2026. So what I think is going to happen is October things start heating up into the end of the year. Maybe January, February, we have like a dip because everyone who's thinking, hey,

it's over four year cycle. And so you're going to see some selling pressure. Plus that's kind of seasonally. in January, you kind of always see something like that, it feels like and then um and then from there people start pricing in the future rate cuts uh clarity act coming in and so then we pick up again and people are not expecting that and so I think and plus ETF demand um you know all these things all these things you're talking about coming online next year too with institutional demand etc uh and that really accelerates things where people now are disillusioned that price is ever going to go down uh because it's just been such a long period of us going up so then you start seeing a lot of leverage entering the system especially with this cheap credit that's liquidity liquidity creation right there. And that

all piles in till about the end of 2026, uh maybe let's say October, November, uh but once you get all that leverage in the system and it just starts getting too unhealthy, there's too much of a frothiness. You got to have a correction at that point because you know you're going to have this liquidation cascade from that top. And so that's when we have that kind of bare market going into 2027. That's my thesis. Uh so it's uh heat up, pause, and then heat up in into 2026. >> I love that. That was a very very uh beautifully articulated thesis and it resonates with me quite a bit. Um yeah, I think you know looking at the drivers of past cycles a lot of people attribute those to the Bitcoin having or to things like interest rate cycles or uh liquidity and credit cycles. Some people

just say this is you know chance it's only been three three you know cycles on history to analyze and so we're looking at too small of a sample size. I think there's somewhat truth to all of those things for what it's worth, but I think they have less of an impact going forward than they've had in the past if they were true. So if you think about the having for instance, by definition, every having cycle has less of an impact in the prior having cycle because there's a smaller shock to new issuance or supply when that occurs. So I think that will be less impactful in the future than it is uh than it than it is today and in the past few cycles. I think that when you think about things like uh liquidity coming into the market, most of the institutional

capital is untapped. Before you had things like extreme money printing an accelerated basis that literally sent money to a bunch of people who didn't know what to invest in and just bought meme stocks in crypto. Like that would be a crazy chapter in history books. Like when you think about 2021 and 2020 like >> beyond the pandemic is like we all literally got direct deposit from the government and then a lot of people like went to Coinbase or to their brokerage account or to uh DraftKings with it. Like those are like the three things that happened. Um and I think that we'll have you know we're more likely to see interest rate cuts in the future than increases particularly over the next few years through this cycle. But I don't think we'll see it at the rate as Jesse

mentioned that we've seen previously. I just think the other side of the kind of cycle equation which is extreme volatility and leverage flush outs will be less intense because you have increased institutional capital coming into the space a lot of which hasn't happened yet but you've already seen Bitcoin markets deepen beyond what they were 2 3 4 5 years ago with the launch of ETFs and I think uh that will just continue to happen so I think as more institutional capital comes into the space will be less volatile than prior cycles. Now, all of that put together doesn't mean in my mind that we won't have pullbacks and we won't have volatility. We've seen leverage flush outs happen already over the past uh few

months, but I do think that there is less risk of a 50 60 70% draw down than ever before. And I honestly think the days of those types of draw downs are likely over for Bitcoin. But that also means the 500% gain in one year is likely over for Bitcoin. But I think that's okay long term. Very excited about this. I don't think that we'll have another four-year cycle. I think we'll continue to see Bitcoin move up and then pull back and move up and pull back like you do see with assets like gold, for instance.

>> I I I feel like I I want to keep going for another hour. So, I'm going to try to wrap us up here because we're almost we're actually over time already. Uh last question for each of you. rest of this cycle, whenever the cycle ends. Who knows when it ends, but whenever it ends. Rest of this cycle, what do you like better, Bitcoin, ETH or Soul? From here until the end of this cycle, which outperforms >> that, Dude, that's so hard. I mean, I would say pretty easy to say like ETH and Soul probably outperform Bitcoin uh just given their smaller size. >> Yeah.

>> Yeah. But from there, Soul's a pretty strong beta to ETH. And so like the higher ETH goes, I feel like the higher soul wants to go and it's really hard to tell if it'll end up performing in line or outperforming or underperforming. Uh that's a mix in my my mind. It's hard for me to make a prediction on that. Uh I'd say it's it's close. It's close. >> Yeah, it's it's a really tough call to make. I think from a riskadjusted basis, Bitcoin does does the best. But I think if you ignore that and you think what's going to outperform my money uh is on ETH and it does make me nervous to say that because I do understand what Jesse saying about slow. It feels like it's just going to snap up soon. And you have the same drivers that drove Bitcoin higher which is spot ETPs and then

Bitcoin purchases driving ETH higher today. And there's a bunch of active filings for Salana ETPs and there's now Salana Treasury companies out. So that pattern matching seems very obvious and we've seen what happens with uh with assets when you have that kind of demand coming into a market like this. And so uh and of course long as a smaller smaller market cap so the impact just continues to be higher and higher when you get down the market cap list. But um I'm going to choose Ethereum for sake of the question. >> Yeah, I'm really torn too. I'm going to answer my own question here. I do agree.

I think Bitcoin dominance has peaked for this cycle. So, I think it's an ETH versus soul question for the rest of this cycle. That being said, I completely agree. Riskadjusted basis. Unless you're listening to the show and you're sticking around on a regular basis, just buy Bitcoin and turn off your life and go go focus on other things and don't worry about it and come back in 10 years and you'll be all good. But between ETH and Soul, I think I really just look at the market cap and I I have an I can see Soul being a 500 trillion$500 billion asset this this cycle. Can I see ETH being a $2 trillion asset this cycle? Like I don't know.

That's that's huge. That's huge market cap that ETH would have to achieve in order to 3x from here. Whereas like I can pretty easily see I can I have an easier time just looking at the market cap. I think it's that simple for me. >> Jen, pleasure pleasure to get you on the show today. This has been a lot of fun. Thanks for joining. >> Yeah, thanks for having us. >> Thanks for having us. Great chatting with you both. Appreciate it. We love to do it again. >> We will do it again very soon. Let us know in the comments if you guys want us to do it again. And remember, another today's episode is financial advice. I'm not your financial adviser. Jesse and Ryan are also not your financial adviser. If you need help with your investments, you should speak to a professional. And one more time, as I

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