March 13, 2023

CD93: Bank Runs and Macro Update with Dylan LeClair

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With all that said,

we have a great guest in the house. We have a return guest, Dylan Leclair, our,

our resident markets analyst,

over here at dispatch. How's it going, Dylan?


It's fantastic.


it's gonna be fun. This one,

our chat 2 2 months ago, we were talking about

a lot of this craziness and potential,

and it seems like it's it's playing out. So, yeah, I'm excited.


So let's let's start there. I mean,

we recorded still dispatch 85.

2 months ago, January 9th, Bitcoin was at $17,500.

We probably said the words bank run 25 times in that

conversation. How is of that where do we stand 2 months later?


Yeah. So, I mean, I'm not gonna come out here and and larp like I am some, you know, top expert, banking analyst, and I don't think you would either. But I think it was more so following the crypto contagion

as, you know, the title of last one is Bitcoin Global Recession. And, really, the real recession hasn't been felt yet. It was more like a financial asset bust than anything.

But but I think,

you know, we we've talked about in a digital age. Right? A little bit of panic, little bit of losses,

you know, just these conditions, these these these mon during a monetary tightening, crazy things happen. And and what exactly breaking? Right? Like, I forget when exactly the British guilt market,

melted down. But, like, stuff like that, like, no one knew no like, knows going in what what's gonna be that thing.

And right now, it's like, oh, we're just starting to see that first,

this this the second order effects, right, following the tightening, following the historic long bond drawdown. Right? Like, they failed because of a duration mismatch, which we can go into the nuances.

But a bank run, you know, teal will. Saying saying to a couple startups, like, hey. Get your money out. Someone leaks it and boom, Twitter.

Whether it's rightfully or not, the crazy thing is in a social media age, you can start to make some outlandish claims. Not about crypto,

you know, worthless tokens or whatever, but

real financial institutions and boom, a run happens. And all of a sudden, you know, a sturdy financial institution

is zeroed and people and the money's not there. Right? It was all credit creation. So that this is, like,

this is how these

these cycles get crazy, and and we're, you know, we're up to our eyeballs in debt, and we just got off the zero bound. And so a lot of these assets that were were valued at, in theory, infinity in a world where money was free, not only, like, 0% interest rate, but also negative, like, real real rate if you kind of minus that inflation, that debasement rate.

And just getting off that zero bound in nominal terms seems like it's gonna start it's it is throwing a lot of things out of whack. So it's gonna be really interesting these next 12 to 18 months, and I think it's probably gonna get crazier than than that before.


Yeah. So,

Dylan, I mean, I'm lucky enough that you're a good friend.

You I've I've noticed through our many conversations that you tend to go fast and hard, and your brain is just filled with a bunch of information that you're trying to throw out there. But let's try and unpack this a little bit and slow down.

First of all, Freaks, if you haven't listened to SIL dispatch 85,

consider listening into it after this,

after this episode.

We went for 2 hours. It was a pretty in-depth conversation. I think it's


like fine wine,

but definitely check that out. But let's let's start with first of all, Dylan, can you see can you see the live chat that's coming in from Twitch and YouTube on your side of the screen?

Yeah. I haven't I haven't been reading it as much, but, yeah, I can see it. Okay. I'm just making sure because I couldn't see it on my side, but I can tell all the freaks are seeing it on their side. So,

I was just making sure it wasn't a,

restream glitch.

So let's let's talk about so when 2 months ago when we had the conversation, and one of the reasons we're having this timing right now is because

to the freaks that aren't aware,

the way,

the stock market works is it shuts down on weekends,

which is insane. But futures open on Sundays, and futures have just opened 12 minutes ago. So we've timed this rip with futures opening,

which people have been


or with some level of anxiety. But 2 months ago when we recorded, there hadn't been

since then, we've had 2 bank runs. We've had Silvergate go down,

and we've had Silicon Valley Bank go down. Silvergate was a major player

in the Bitcoin and, quote, unquote, crypto ecosystem,

and then Silvergate Bank was much larger. They were, like, the 15th largest bank in the world, I believe. They had 200,000,000,000

under deposit,

and they banked a lot of VCs in Silicon Valley and their

companies that they would invest in.

I think an interesting place to start here is when you were looking at the fall of Silvergate

and SVB, like, what did you see out of that?


Well, I'm not gonna gonna say I was I covered or mentioned or even was was intimately familiar with Silicon Valley Bank before the headlines started popping up on Wednesday.

Most of my my bank analysis

in the past,

really, year has been around like, it's it's I've tried to focus from a Bitcoin lens, how it's gonna affect Bitcoin native liquidity. And so the only ones I had really looked at in-depth were,

Silvergate Signature. Right? As I I immediately like, post FDX collapse in early November, I was like, okay. Who's their their fiat rails? Because this is gonna be, at at the very least, like, a regulatory nightmare.

So Silvergate was was 1, and then Signature is 1. 2, I'm I'm very

curious to see what their stock does tomorrow morning because I think it's gonna be quite telling If they don't have a bank kind of,

deposit, you know, fund that, like, the the treasury spins off real quick or, like, congress, you know, approves very quickly, then

I think or, you know, that some people say the Fed will interject. I don't think they will directly to recapitalize,

you know, a a public bank, but at least now at this venture. But if we get a couple more bank failures, which is what they're petrified of on on Monday,

or this week, which is not my base case. I don't actually know how to, like, how to how to

assess that probability of, like, okay. Yeah. We're gonna get this mass to run. But that's the thing. Right? It's a social media age. It's a digital age. It's the first time we've kinda done a tightening cycle when information,

you know, moves as quickly. Like, we it kinda did in o eight. Right? But Twitter wasn't really a thing. Like, this it was mostly a Twitter like phenomenon. Right? Like, the the the

Silicon Valley Bank worries. Like, it spread like wildfire, especially for, you know, tech based San Francisco,

native companies,

VC companies in particular.

So, yeah, I I, you know, I think we're gonna see

more of this. I think there's gonna be the FDIC is gonna run out of money. I don't know when, but they have a 120,000,000,000.

They've already probably

I don't know what they've I I, you know, I think only, like, 10% of Silicon Valley Bank's,

deposits were were actually insured. Right? Because it was, like, you know, a lot way more than 250 k for a lot of these these, bank accounts.

But, yeah, I think they potentially

the FDIC is gonna run out of money at some point. They're gonna have to they're gonna have to bail in,

more of these banks, but they're gonna bail the the that bail out that bail in so customers don't lose their deposits with printed money, essentially.

There's gonna be a whole lot of word jargon. There's gonna be a whole lot of layers of obfuscation about what's actually happening and the reasons for why it's happening.

But, ultimately, it's just gonna be socialized

up up you know, upon the the circulating supply of dollars over the long term. Like, that's what's happening.

And, you know, who knows what what's gonna I I don't suspect the Fed's gonna full pivot

money printer goper, yield curve control, you know, hyperinflation

style over Silicon Valley Bank. And people, you know, people saying a Fed pivot right now are like like, this is,

you know, this is bare. Right? Like, this is just, like this is they're not actually real worried yet,

and Lehman's gonna come.

Right? So


yeah. Lehman hasn't happened yet?


I don't think so.

I like, so so my base case and I kind of, like, from a macro perspective,

and, like, as a student of history, right, I I didn't live through 0 a, and that's obviously a reality for anyone that's familiar with me or my age or, you know Right. Through 0 a 5.

Yeah. I was, like, 7.

So but I've I've read a lot. Right? And I'm reading about how these tightening cycles go and these debt based systems work and the natural, like, cyclicality of debt itself. Right? You're borrowing from your future and societies, you know, in aggregate and human psychology,

and and just, incentive and greed. Right? Like, we know how these things go. And I think the bust phase, like, we we saw the fine kind of the financial bust side of things. In my case. Then even with Bitcoin at 17 k, like, I'll I'll own it. I'm like, hey, Matt. Like, I DCA a little bit of Bitcoin every single day. I have a bunch of Bitcoin, and I got actually way more cash as a percentage allocation than I did for the last couple years. I said that. And I still I still have some cash. Like, I still my Bitcoin position's growing, but my cash position is as well. And I feel fine with that because I think,

the the the pendulum as we know it in terms of, like,

you know, the the business cycle, the the global, like, economy,

and also asset valuations and the value of the currency,

I think these cycles are becoming

more volatile in a way,

or, like, may have more velocity. Right? Like, we had the biggest asset boom following the COVID stimulus, and it and and it peaked 18 months months later. Right? And bonds and equities drew down in tandem for the first time in 40 years, and it just wrecked a bunch of models. And now we're just starting to see like, who knows? I I I imagine that the Silicon Valley uninsured deposit probably gets 60% of their money back. 70%. I don't know. I I I I don't really know if they're gonna get fully bailed in all the uninsured deposits, but, you know, maybe they raise the FDIC number. I don't know what's gonna happen. But just things like this, right, where, like, it would impact probably a a1000000 if they didn't get bailed out or bailed in.

Like, if the depositors don't get their money, then, you know, there's,

like, a 1000000,

employees in the US that these firms are probably can't, like,

can't make their bills or at least, you know, or you have to lay off some people or, like you know? And, like, the and this is how the the the the effective monetary policy in 5%,

you know, yields, and maybe not 5%, but just a tighter

or more restrictive monetary policy than was the set baseline 1, 2, 3, 4, 5 years back. And that just shock that exogenous shock just doesn't happen instantly. Like, I think the headlines would make you think, and it's just a slow moving kind of domino effect until they have to aggressively

shove that that that pendulum, or I guess pendulums naturally swing, but shove, like, you know monetary policy is like a switch now. And that and for the longest time, it's been a dial. And I think that, like, that's a Luke Groman analogy. But I think, like, I my sole base case is that it's gonna have to get for them to pivot,

right, from, like, a a political perspective,

and just what, you know, what their their mandate is, things are gonna have to get bad. And and and the overreaction, I think they're gonna try to keep it tight for longer than they probably should because they they messed up that trans story call so much, and they're trying to gain back their credibility.

And, ultimately, it probably blow like, my base case is it blows up in their face.

But I don't think Silicon Valley is it's blowed them with their face yet. It's like, okay. You know? Like, these guys were responsible,

long duration debt.


But it has a potential to intensify. So covered a lot there, but those are top of mind.


Dude, you cover so much in one rant.


okay. Well, first off,

so Bitcoin was at 17,500.

I know I'm a broken record.

I just always just stay on both StackSats. Right? Just hold Bitcoin and cold storage.

Only asset that doesn't have counterparty


you I guess, gold or metals, you can hold those yourself,

but it's much easier to custody Bitcoin,

than it is you know, a $1,000,000 in Bitcoin is extremely easy to custody in comparison to a $1,000,000 of gold.

So it's very unique in its lack of counterparty risk.

In these times of low trust,

obviously, you know, Bitcoin is a safe haven in that result even if the price does not

reflect that because people panic. They wanna sell a liquid asset. Bitcoin price falls.

And the the the question

isn't necessarily

as a trader, does cash

make sense in this environment? Because, obviously, during volatile times, it's good to have, quote, unquote, dry powder. I mean, I would argue that Bitcoin is dry powder. But, like, to anyone who's holding cash in Silicon Valley Bank, they have nothing right now.

So the question is, like, if you are holding cash, especially large amounts, I mean,

I was

let me try and unpack what you said. First of all, Silicon Valley Bank, they were one of the main

banks for for

tech in in in the United States, specifically smaller tech, like startups, VC backed startups, and whatnot. I have a friend who,

her company reached out. They had their entire treasury in Silicon Valley Bank. It was supposed to be one of the trustworthy banks,

in the United States. It was supposed to be

the most trustworthy bank in Silicon Valley,

and they're not gonna make payroll. So no one in is a non Bitcoin company. No one in our company is gonna get paid a paycheck, this week, maybe not next week. Who knows when they get paid?

So you have that issue. You also have individuals

that held large amounts, in these banks.

Dylan just saw something, so I'll get to him in a second. Matt But Signature


Bank just closed, man.


Holy crap.


Signature Bank Well, how how does it authorities.


Oh, shit. Okay. So there's

there's 4 major banking partners. There's 4 major banking partners in Bitcoin and crypto. There's,


They shut first. Then,

Signature, which I guess just shut down now. Silicon Valley Bank.

And then we have Prime Trust, which is not like a traditional bank. They actually keep deposits in multiple other banks,

including Silvergate.

Do they use Signature as well? I don't know if they use Signature. They use BMO Harris.

I think they use Cross River. There's another one.

But so the question comes down, Dylan, is, like, maybe maybe if you're under this 22 150 k deposit limit, you're an average person.

Right? The FDIC, the US government essentially says, we will ensure your deposits up until 250 k. If the bank fails, we will give you that money.

That's one thing. But, like, I have a friend who has $1,600,000

in a bank account.

Where the fuck do you put your money if you have that much money? Like, what are your options to put that money?


Well, yeah.

Your options, you're probably gonna you're probably gonna if you can get one, go to JPMorgan.

Right? Which is like like or I I 4. You just go to the big banks.

Yeah. Well, like no. You know, what do I do with $1,000,000? It's like, you know, like, obviously, I I this is under the assumption that you, like, have the cold storage bag of Bitcoin. And and people that say, like, yeah. But, like, you know, what what if Bitcoin goes down enough? Like, goes down to 80%, 70%, 60%, like, then how does it serve you? And, like Right. You know, the answer is, like, own more Bitcoin then. Right? Like you know what I mean? Like, oh, you're complaining about the price draw on. Oh, just have more money. You know what I mean? Like because because now it's it is truly, you know, sovereign,

fuck you money.

You know? And and the that's a powerful thing. I think people are figuring that out.

But, like, I

you know, like, the dry powder I have,

is on, you know, under 250 k and

and and some T bills and a brokerage account. And I can get I can get that powder to Bitcoin platform

in hours. So I'm not to, like, be really too worried about it. I guess not on weekends. Right? So Right.

But, like, I I understand that this time, not at risk. But,

yeah, I understand there's there's trade offs, and I'm and I'm happy with it. But, like, for a lot of people, right, like, if I lived in,

you know, if you live in a 3rd world country, like, we're seeing with stable coins, like, oh, do you wanna hold these things?

Never mind the fact that they can be, you know, arbitrarily frozen or if, you know, sanctioned or whatever.

But, like, you know, I would be way more in Bitcoin. Like, I these dollar rails and other places are even in the US, we're seeing is a shady.

An update on signature. The depositors aren't losing their money. I think their bank's just getting shut down. It says

it so it says shareholders and certain unsecured debt holders will not be protected. Senior management has also been removed. Any losses to the deposit insurance fund to support uninsured depositors will be

recovered by a special assessment on banks as required by law.

So depositors are made whole. Signature shut down

signet for crypto,

signet send network for Silvergate,

where the biggest fiat rails behind the scenes. It was almost like a slush fund,

of of it was like an off chain stable coin.

Right? If you think about it like that where

the silks,



Silvergate. And even to an extent, the Silicon Valley Bank. Right? If you if you look look up how they got their deposit base massive. And this we have this massive everything bubble. Right, Matt? Crypto goes up. I mean, there's been a you know, already a 12 year bull market in,

in equities.

Right? But private equity and all these things that are just trying to chase higher and higher returns, right, it turns into just, like, just, like, literally chucking money at anything, any startup, and there's this massive bubble in, like, you know, the private sector, right, the tech sector.

You know, we had we had software as a service companies that were just

it was basically, like, you know, a delivery service with a network effect. Right? Like, be worth 1,000,000,000 and 1,000,000,000 of dollars. Scooter companies,

scooter apps, 1,000,000,000 of dollars, facts. You know? It was all this free money. And so these,

Silicon Valley

was like, yo, bank the bank with us will give you easy loans.

We'll give you well, you know, we'll we'll give you easy access to credit. And it worked during the virtuous up only VC,

you know, cycle. Right?

Same with

Signature and Silvergate. They're like, okay. Come here. You'll get access to the Send Network. You'll get access to Signet. You'll be able to send money to to all of these crypto companies.

The the trade off is that the cash you keep, it's it's zero in straight deposit.

So we'll make a, you know, killer spread because we're gonna go buy,

you know, 10 year treasuries

at a 100 basis points of yield, 1% yield, and we're gonna rake in money, you know, locking in this 1% while we pay you 0.

And they realized, like, oh, you

know, well, 1, it was FTX failing, the KYC stuff, AML. But they were that was already masking a problem of if you're in long duration securities,

meaning you're you lent money to an institution,

right, to the government, or, you know, may maybe maybe it's mortgage backed security pool.

You're saying, okay. You know, I'm gonna lock

in a 2% yield on a mortgage bond, a 3% yield on a mortgage bond for 30 years. Right? And as mortgage rates go from 3 to 7%,

you you didn't lose your initial investment because the money wasn't really doesn't exist right now anyway. It's just marked

the value as is as if the money exists today and you're going to get paid in the future. But as those interest rates rise, it messes up that present value equation,

and so the bond value falls.

Right? So, like but the banking system, the, you know, the accounting, like, they do all these fancy things that, like, they have the asset until they actually need to sell it,

and they can only get the the current value of it, and it's a lot lower than what they paid. And so that's, you know, that's that's what's bursting, right, is this

all encompassing everything

bubble in in duration where money was free

out for 30 years. Right? Like, the the value of all these companies, the real value was infinity because the cost of capital was negative. And so all these weird things happened, and and and the epicenters of that I mean, crypto and and, you know, Silicon Valley Tech were, like, 2 of the kind of the hot hot flying sectors,

while these banks are now getting, you know, shot behind the shed. So I think it's interesting. Out of the signature thing, I kinda reacted strongly because

it's just another one of those US dollar off ramps, on ramps. Right? Whatever happens with circle. I think circle will be fine, but, like, there's there's there's gonna be somewhat of a regulatory process. Going


Yeah. So so that's gonna be really interesting. You think USDC will be fine?


Do you have the USDC right now?


Fuck. No.


Excuse my French. Sorry, mom.

No. I don't. I don't think that makes any sense.

Well, the interesting thing is, like, I so they only have their buffer as stated on their reserves.

It's only 47,000,000

between this this the the value of their treasuries and the

USDC circulating supply. But I wonder how much of a

a treasure chest they have

behind the scenes because the USDC, like, incentivized, you know, indirectly indirectly or directly. They've they've incentivized

big firms, traders,

liquidity providers to use USDC.

They've almost, like, paid them to do it. Right? And to to, you know, get USDC coins in circulation, try to create, like, a quasi network effect. Uses it. And all of a sudden, as rates short end rates go from 0 to, like, 1 to 2 to 3 to 4 to 5%,

the the stable coin issuer business gets quite quite lucrative.

And so whether they're you know, like, some people will think this is, like, some elaborate plot to, you know, Silicon Valley Bank, bank run to you know, and they're not gonna get bailed out because it's gonna screw USDC and screw crypto. Like, I read that on Twitter

on, this weekend. I'm like, guys, this is insane. But I it just highlights, like, the risk. Like, you USDC circle was, like, establishing all these banking partners to diversify their risk.


And they got, you know, 80% of the customer's money, like, on,

with BlackRock or BNY Mellon, both of them, just like in short duration treasuries. And in theory, that, you know, that makes, like, I think, a 100,000,000, a 150,000,000

a month.


But who knows how much of a treasure chest they have? They said I think Circle said over the weekend, I hadn't been too tuned in to the news flow on Saturday that that,

they would cover with corporate funds, and that's why USDC bid. I think it's at 95¢.

But the interesting thought is, like, Matt, as so this if if they're truly redeeming,

you know, one USDC for $1, they said that. And tomorrow,

you have all these people that are holding 95¢ market value USDC tokens.

And even if the price goes up a little bit, just anyone with an incentive or interest to get at $1 worth is gonna go to circle. They're gonna burn their USCC, and they're gonna pull their cash. And so that $3,000,000,000

hole, and it's not a $3,000,000,000 hole. Like, what if, you know, there's a 70% recovery value or 60%.


Most of the hole just to be clear, most of the hole is SVB, and it looks like

it looks like the Department of Treasury, Federal Reserve, and FDIC just said that they're gonna bail out all depositors,

regardless if you're over the insurance limit for Silicon Valley.



Tomorrow When did that news drop? Yeah.

I think it's just dropped. Earlier.



No. They just said it right here. I put it in our private chat.

They're they're not bailing out shareholders.

They're not bailing out unsecured debt holders. Senior management is removed.

They think they can cover everybody by just selling off assets,

but they're gonna

backstop the whole thing and say that all depositors will be made whole on Monday,

AKA tomorrow. Wow.


This is insane. This is I mean, I'm not a lot of it mattered.


But they This is just like They said that same thing for signature. Right? That's the same idea for signature? They're just gonna bail out depositors instead of shareholders?


Well, so I the I have a question with the the signature thing. Like, I are they zeroing share shareholders that they just announced that? Like, they're they're just winding it down? I don't know. I don't have the signature link.


Where's the where's the signature news? I don't have the signature news. I'm just looking at the Silicon Valley Bank news.



that tier 10 k crypto,

you know, the crypto Walter Bloomberg

posted. Oh, shit. I mean, that should


that's where Circle's USDC

issue was on SVB primarily,

or presumably.

So maybe USDC escapes from here, but I just Wow. Wow.

I just Wow. Can can we really stop the does the contagion really stop here? Like, what kind of who's gonna keep their money in a regional bank when they can just move they're gonna move to the big 4. Like like, it's only the top banks. Like, why would anyone keep over

250 k in any other bank right now?

I mean, obviously, people should move into Bitcoin, but now they might not even be able to easily move into Bitcoin because

Signature and Silvergate are out of the picture.


Well, like, think about Coinbase.

Like, Coinbase is one of their biggest Coinbase,

they were like, hey, guys. Like, don't worry. We're leaving Silvergate,

and now we're heading right to signature. And so, like, I met Coinbase being a public company,

you know, etcetera. Like, they're, you know, doing it right,

just from, like, a compliance perspective or whatever, even though they're recently kind of giving a middle finger to the SEC,

which, you know, respect them for it, taking them taking on the man,

the reasons why we could we could talk about, but,

what's their dollar rails now? Right? I I don't I don't maybe not Coinbase,

but, like,

all these other bucket shop derivative exchanges that had US banking relationships

over the last year. Like, Binance just got cut off. Like, all these second, third tier,


institutions got cut off.

You know, the international

signet and Silvergate presence was strong,

and they're still and and, like, the also, like, stable coins served a big part in that, and that's getting cracked down real hard.

So I think it's just gonna be really interesting to watch where I have no doubt that, like, Bitcoin,

will do well if broad if broad risk assets

do well. It'll do the best.

But if we're thinking about crypto native whales, or rails for westerners to onboard the Bitcoin, like, if you had, in theory, Matt, you know, a $1,000,000,000

to allocate you asked me this last time, like, what would you do with it and, you know, or, like, where would you put it?

We talked about this last time. Like, aside from Bitcoin, if you wanted to have cash Stay on the Dyke SaaS.

If you wanted to get that money to Bitcoin

now with, you know, a lot of money, like, where do you go? What do you do? Like, what do you do? And that's gonna be Did you see the hash rate of screaming?


Right now? I mean, we have we have

up on the screen share because we have mempool. Space every time for every dispatch. And, the next difficulty adjustment is gonna 16% difficulty increase.

I mean, if you wanna get money into Bitcoin right now in large amounts, it'd probably be to secure ASICs and start mining.


You think so?


It's just a theory.



yeah, dude. I and, like, also, like, try buying I'm I'm watching these spreads and watching, just how Bitcoin trades,

and, like, these order books. And, like, there's you know, if you had to buy a $1,000,000,000 of Bitcoin, like, $1,000,000,000 entering the system would would send this thing pretty hard because the markets are super illiquid. I tried to beat that home recently. Pumping right now.

Probably, yeah, everything's pumping pretty hard. Equity's up 80 bips, streamed up higher.

And and that that,

those those facilities. Right? The like, what they just announced that they're just gonna Silicon Valley Bank's gonna be made whole.


our signature bank The deposit is insolvent. Yeah. Yeah. Not that they're insolvent, but

that, like I think this is, like, an important

point to understand for how the fiat system works. But, like, when those fractional reserve banks collapsed, right, that money, those deposits were just destroyed.

So markets are pumping right now because they they basically said, like, we're going to

we're gonna fill that hole. We're not gonna let that money destroy get destroyed, contract. Right?

And so that's that's why markets are up. That's why Bitcoin's up. Perfectly logical, and I would expect to see that.

It's gonna be interesting to see,

you know, if there's any other kind of

panics. Right? Just as a second order result of what we just saw,

because the banks were still trading pretty poorly. So who knows? Maybe that they determined that this was it, but I'm I'm I'm also curious to see what happens with signature,

share like, shareholders. Like, does the stock 0, or does it just stop trading? Because I know a couple of people

that, you know,

have had put on short positions.

I've played the stock a bit as as with Silvergate.

But, yeah, that's gonna be interesting to see. Like, I don't I don't know what happens with the equity of of Silicon Valley Bank too. Because they, like, traded to to $30 pre market, but they didn't let it trade after 107.

Like, that's a brutal thing. Like, there's there's people that were short legged these things that were completely right about it being a bank that was going down to fail, and then,

you know, treasury comes in, FDIC comes in, like, nope. Shut it down. And then the stock just never trades again. It's pretty it's a brutal game.


Yeah. I mean, it's a rigged market.


I mean, it seems if I'm reading this by the way, we just sent each other the same press release. It's it's the same press release that that says they shut down Signature Bank and

Uh-huh. Silicon Valley Bank. That's how quick all this is moving. We're just, like, we're not reading the whole thing.


If I keep reading into this, I mean, it it reads like

signature is done.

All management is out.


are zeroed,

and depositors are being made whole.


does that I mean, maybe they think that will stem contagion, but

if you're a shareholder of a smaller regional bank,

why are you holding shares in that bank if the government can come in and zero you out


in a heartbeat? So that It kinda creates a run on the stocks.



Right? And is my take there correct? I think that makes sense.


I think yeah. I think it's that's that's a really interesting point I hadn't even thought of,

in this context previously


and that's and there's an interesting kind of reflexive relationship between,

you know, confidence in a bank, its equity price,

and it's a virtuous cycle in the way up and way way down too. Right? That equity capital and what the bank can lend out, as its assets are booming and its stock is as well. You I mean, that's why the the these bank stocks were down 80%. Right? It's because their deposits had gone down. Rates had gone up, but it cut into their margin, and they invested all in the long that long duration crap.

But, yeah, if I'm why would you hold a regional bank stock right now? So so what that what that in this, you know, index looks like tomorrow is gonna be really interesting.


Who knows?


Yeah. I mean, if you look back at SVB, like, the way the whole SVB things went down

was they seemed pretty much solvent


but they were, like, covering their ass a little bit, so they decided to sell some stock.

And that tanked the stock price, And then that kind of spooked everyone even more into the bank run kinda situation just to show, like, the connection between

the the stock price and the stock's performance

and confidence in the bank. You know, if you see us, a bank stock fall by 60% or something,

most people are gonna try and

and and escape the bank. I mean, there's there's no negative of moving your funds. You don't get penalized. You can always move back later.




And I I would also say another thing that I thought was

was really interesting about this, and we talked about this 2 months ago, is this idea of, you know, 2008, there was no social media, so they could control a lot of the narratives.

Whatever your favorite mainstream shit news

platform is,

they're all in the pocket of of government officials and and their ad sponsors.

A lot of that


right? And we even talked about, you know, potentially inciting a bank run, you could be hit with a felony.

That combination meant that

the news didn't really get out. But now that we live in a social media generation,

a social media dominated society,

this shit spreads like fucking wildfire,

like, super quick. Like, I the

as we watch the trust and institutions break down, like, that can happen way, way, way quicker,

than ever before, and that's kinda what we're witnessing over the last week or so.


Yeah. Yeah. We we probably had not seen the end of it. Like like, we don't know and this is, you know, every everybody became it was kinda a meme. Right? Everybody became a banking analyst on on Thursday Friday. Yeah. Not a banking analyst.

Yeah. Yeah. This is the most interesting thing about,

about, you know, social media error today and how how how fast everything spreads information knowledge.

And we don't know what that next thing is gonna be. Right?

And, you know, markets are up big right now.

I think it's interesting because,

you can look at, like, you can look at these, like, you know, future curves or, like, Fed funds futures for for the interest rates. Right? And and, basically, they those are down, you know, just on the open. Right? Like, they're down 30 basis points, like, in 2024. So the the these cuts or these these hikes are getting rapidly

taken off the board.

Everybody's saying it hit like they can't raise anymore.

We're just just last week, they thought they were gonna raise another 50 50 basis points,

later in March. So I think that's gonna be interesting. I think the Fed still to, despite this, it's this is more of a treasury facility

to kinda come out and,

I mean, it's a joint statement. Right?

I I guess we do we know the specifics? Like, what is the Fed monetizing this?

Additional funding. Dude, I I know


nothing. I'm a I'm a simple person. I just stay humble in StackSats. I brought you on here because you know you know all the things.


Yeah, dude. Okay. Got it. Fair enough.

Yeah. I this is gonna be interesting just to see. I I don't think you've heard the end of of of, you know, this whole maybe it's not a bank run, but, yeah, until the Fed really turns on their bazooka. But who knows?

I'm not an expert either. Don't listen to me. You


I mean, is yeah. We have scale bar in the chat. Like, is this the pivot?

No. But I think This doesn't necessarily seem like it.


Yeah. I think this is like there's gonna be a moment where people, like, are convinced it is the pivot,

and they're probably gonna, you know, just put their foot

on the on the brakes again. So who knows? I I I also have you know, I I kinda have the the bliss of having that long term,

you know, stay on those stack stats mindset.

I mean, I'm I'm incredibly bullish on Bitcoin on the long term, and especially, like, in the wake of all of this,

the the orange pills that are being doled out. You know? It's kinda ironic too right now. Like, like, Bitcoin being the the best performing asset in the 2020,

20 tens,

outperforming everything.


against all, you know, Silicon Valley VC dart throwing,

right, during this, like, you know, up only tech bubble virtuous cycle thing,

to the and then, you know, San Francisco peaked

kind of in, like, that 2020 range,

COVID. We had, like, the this everything bubble,

you know, cycle upwards and then an implosion,

and then all the Silicon Valley. I guess they got their money back, but, like, for a moment, they thought they lost everything. They got completely rugged,

and their money wasn't their money. Right? Like, I've been tweeting a bunch of matrix memes recently.

Like, I think a lot of people woke up this week,

to to the fact that, okay. Yeah. You got your treasury bail and maybe that makes you feel better.

But that, like, just like people like, what? I'm an unsecured creditor? What is that? And it's like, oh, you know, you didn't read that,

you know, 5 page document the bank hands you when you you sign up for this account. You are an unsecured creditor,

to this institution.

And so that's that's a pretty big,

you know, if not orange pill, red pill,

maybe black pill

for a lot of people. It's like they didn't know these things. They never thought about it. It's a western privilege to not have to think about these things. And we are, you know, an elitist tech

tech executive in San Francisco and you get rogue, it's like, wait. What?


So, I mean, part of my thesis is that

part of my bold thesis for Bitcoin and Freedom Tech in general is this idea that people are just gonna keep getting burned, and then as they get burned, they will learn their lesson.


and they will seek out alternatives that are that are better and more sovereign, including Bitcoin.


is this the moment? Is this is is this the great realization

that's happening, or

did they just get a handout and as a result, there there won't be a lesson learned here?


Is this hyperbitcoinization?

Yeah. Yeah. I don't know. I like this is just another one of those those moments. I think the USD DC thing too is, like, one of those moments where, like, there's just it's just gonna yeah. People are gonna continue to get burned. Not saying Circle is doomed imminently or whatever, but, like, oh, the stable coins aren't actually nearly stable. It's that it's, you know, it's a bunch of assumptions that,

you know, you don't get robbed. They don't mess this up. You know, there's trust inherent in in all of these assets,

that are supposedly mine. Be fucking


you're fucking insane

to be holding a large amount of money on USDC.

Like, who the fuck are these people?


It makes no sense to me.


Yeah. Like, well

yeah. That's why it's Circle. Like, incentivizes people because because why would you own cash

at 0 with 0%. Right? Cash right now gives you 5%

if you you can, like I mean, investing in I I guess, getting t bills to to Bitcoin might take a couple days if that's what you're talking about. But, like, if you're not doing anything illegal So t bills are short term


t bills are short term loans to the US government.


Yeah. And and and it's synonymous with the the system is it's it's synonymous with cash on the short duration. So, like, you know, the shortest end of the the US,

treasury, you know, debt securities. Like, they're not gonna default upon them. Their their value is not gonna fluctuate, and you're basically just getting a steady income stream, which for the last, you know, 10 years post GFC

was 0%. And now it's, you know, 4 a half, 5% in nominal terms. And you can still say that that real yield is negative after inflation. I I'll take that. That's fair, maybe.


I mean, it definitely is.

Yeah. That that is fair. Inflation's, like, 12 to 15%.

Right? Like, what? Yeah.


Yeah. And and inflation is is obviously

not just an an average index when your your life and depending on what you're buying and how you wanna how you wanna consume. Inflation is definitely more than the the stated CPI, but that's, you know, kind of another But


I I will agree I will agree that t bills t bills make the most sense if you're gonna lend the US government money. Like, I don't know who the fuck is lending the US government

for 30 years at 4%.

Is fucking insane. Like, with their track record, like, how would you how do you how who's deciding that makes any sense? Like, how I mean, obviously, market participants are pricing that in,

and they think, like, for risk adjust adjusted returns, like, 4% for a 30 year loan is makes sense to the US government, but that's fucking insane to me. Like, given their track record, I wouldn't even let them sleep on my couch.


Yeah. No. The long duration stuff still. I mean, Greg Foss, I would like yeah. I think you were as well. Like, I would like to say myself,

we're hammering the the drum at 1%,

2%, you know, long long end yields. Right? Like, why would you lend the money the the US government any money at 1%

before inflation for the next 30 years? Why would you ever lock that in?

And, like, this is a lot of stuff that those banks bought. This is what pensions we're buying. Right? Like, the 60 40 portfolio is assumption that, oh, don't worry. If stocks ever fall, bonds will rally.

And it wasn't stocks falling this time that triggered everything. It was bonds falling.

So all their portfolios and models and correlations were, like, blow blown up because the long end went from 1% to 4%. And even at 4%, it's like,

you know, you're still betting that that

you're still, you know, investing under the assumption of any return. But I think at 4%, like,

I would I would honestly expect US inflation to average over 4%, maybe 3%, 4%, I think higher than 4%, honestly, because I think we're gonna gonna find, you know, an exponential part of that issuance. I think we're maybe already

there, for the dollar. But, yeah, it doesn't really make all that much sense unless you're investing other people's money, which is why it's it's who's buying the 30 year stuff. Right? It's pensions. It's endowments. It's

insurance companies.

And so


it's where they have to. Right?


Yeah. Yeah.

So, I mean, who's buying it? It's like, oh, your, you know, your your your pension is or your financial adviser is under your on your behalf. You don't even know it.

But, like, it's it's weird, man. Like, we're you were, like, talking about the 2 types of cash. Right? The 2 types of cash, like, that everyone thinks of, and they just, you know, see the, you know, the digits on the screen in USD, and they feel feel good about themselves because, like, in in first world countries in the US financial system, like, bad things don't happen. And and even after 08, like, people like, bad things don't happen. Right?



you know? But the money that you have in the bank is just there. Right? And they're fractionally reserving it and lending it out on the long end. It isn't actually, like,

physically in a vault for you or digitally in a vault segregated for you. Right? That's understood. Some people get that. But even, like, on the short end, like like short end treasuries or long end treasuries, like, that money doesn't exist yet. Right? Like, it's just it's an IOU. It's like this this debt based system, when you actually break it down, think from first principles,


it's so wacky and insane, and that and and it's just obviously normalized. Right? We haven't grown up in any other environment, so thinking outside of this, you know, box of the system doesn't make all that much sense. But, like, a bare asset like Bitcoin,

you know, with a password with a username and password,

right, is is is much actually easier to understand for anybody

today that hasn't, you know, already been indoctrinated by, like, this current system. Right? I think that, like, when you talk to anyone my age, anyone younger,

and really anybody that's confident with with technology and

systems is Bitcoin is is obviously a much

it's a much more natural system. Right? It's like almost like a return

to the norm. Not a return to the norm because we've been in this banking system for a while, but it's just like you you know what I mean? Does that make sense, or am I just rambling?


No. No. I mean, it makes sense to me.

I mean, it it it's at least a return to sound money, like, at least, like, where we were kinda at the gold standard times.

Obviously, there were a lot of bank failures back then as well.

I, first of all, there's a comment from CBDC engineer if now is a good time to read mandibles. It's always a good time to read mandibles, but especially now. And if you haven't listened to last week's episode,

with Lionel Shriver, the author of mandibles, definitely check that out.

But on the corporate cash side,

there's 2 elements here. Right? Because SVB is interesting because it it mostly hit corporates. And maybe this is just also my own


or my own differing perspective. I mean, 2008, I wasn't as young as you, but I was still young.

Now, you know, I'm a partner at a venture fund 1031.

And, like so the last 2 months, 3 months, we've been talking to all our portfolio companies.

You know, what exposure do you have? Like, there's a lot of concerns about different banks. I mean, our

our conversation we had 2 months ago, I was yelling about bank runs.

So we've been in a lot of dialogue with the different founders that we back.


you know, for better or for worse,

the ones that come back to us and say, like, the majority of our treasuries in Bitcoin,

we're very comfortable with that. Like, that is the like, they will make payroll next week. No matter what the fuck happens, they will make payroll next week. The ones that are playing games that are, like, running between bank to bank because they these guys have big treasuries. Right? They have to hold large amounts of of dollars.

Like, USDC

is probably the extreme example of that. Right? Where they have to hold 1,000,000,000 of dollars

of collateral, and it's like, where do you put it? Where do you put, you know, $5,000,000



for a small to medium sized business? Like, how how do you just keep that secure while still having a functioning business?

And I think for a lot of them, like, Bitcoin should become more obvious. Like, you don't have to put your entire treasury in Bitcoin,

but there's gotta be some of these I mean, I I hate that all in podcast, but, like, I was listening to it this week just because they all got fucking rugged.

And they were freaking the fuck out. Right? But if some of their portfolio companies were 50% treasury in Bitcoin,

they would be able to pay their payroll this week. And I wonder if any of them are starting to realize this or if it's gonna take more.

Some will realize. Probably the majority will take longer. Right?


Yeah. Jace Jason's manic tweeting was pretty funny after he's been, like, shitting on Bitcoin for a while. You know? It was like it was, like, all caps. Like, apps.


Yeah. That's it was funny.

But, yeah, I don't know. Who knows? Maybe they maybe they get it. I think some of them. I I I still keep coming back to it, like, mentally, like, the signature thing. I'm just very fascinated to see how it all plays out,

because that's

like, there's been there's only 2 crypto banks. Like, they that for for big for big companies, for, like a lot of these companies that you've never heard about that are, like, you know that were kinda, like, backbone.

Maybe not for the Bitcoin complexes we wanna think about, like the miners or whatever, but I'm sure a lot of miners were at Signature and and Silvergate.

But, like, you know, the for the, like, the crypto economy. Right?

Like, Signature and Silvergate were where you went, and and the regulators are serious. They're playing game.

They're calling all the the entire industry unregistered securities.

They're calling out fraud.

People gave respect and and and rightfully so, gave the SEC a whole lot of shit in 2021

and 2022 for not really doing anything, and they thought there was people who are gonna walk stock free. And now the all these Altcoin, you know, labs, right, where it's like, oh, we're not you know, it's a decentralized

crypto, and then it's like, you know, one lab,

insert blank here,

created the protocol, you know, has a bunch of funds,

ICO. They like, all of those guys are getting busted. They're getting actually, you know, sued, indicted.

And now, you know, they can't really get banking relationships.

Like, it was funny. Like, I I saw on a tweet today. It was like, dydx.

Like, I don't really follow all the crypto stuff, but I I I know it a little bit. And the dydx is like a decentralized,

perpetual swap decentralized futures protocol, but they have a token.

Right? And it was like someone was tweeting about Decentralized bit mikes.

Yeah. And someone was tweeting about decentralized Bitnax access to a bank account. They're like, oh, d y d x. Like, I think maybe they were at that's at one of these banks. And I was like, wait. What? Like, they have, like, a bank it was just it was just so

laughable and paradoxical.

And I think, you know, a lot of all those guys. Right? Like, I I really wonder who's gonna bank with Coinbase for their USD rails. Like, I know that I think they're at JPMorgan for, like, their corporate funds, but for, like, this their their customer funds,


for all the exchanges. So we're getting signature


guys for Kraken,

okay. Like, may you name it. Right? I'm not even picking on any individual names. So who comes who steps up to the plate if anyone,

you know, without

much tighter regulatory scrutiny

on the

whole Bitcoin crypto complex. And I'm lumping them in just for the sake of it, but I think, you know, we're starting to see a real distinction between Bitcoin and crypto in the eyes of authorities where that wasn't previously.

I mean, the the, you know, the New York,

AG calling Ethereum a security and explicitly calling out,

staking as an investment and, you know, naming Vitalik. Right? Like, these are I'm not saying I necessarily agree with it or not. I don't really. I'm more of an anarchist at heart. This is why the bailout things are so, like, laughable. But it's gonna be really interesting to see just, like, the second order. I know Bitcoin's pumping right now. You know, even, like, Ethereum, all the cryptos are pumping. Right? Because that's what that's what happens when Bitcoin goes up. But it's gonna be really interesting to see how the next 3 to 6 months never mind the macro, more the micro

of regulation,

western financial,

interests probably saying, you know, hey. Go knock down Circle's door. Go knock knock down Tether's door. They're calling Stablecoin Securities.

Right? Because issuing a Stablecoin is a pretty lucrative business with rates at 4%, the rates at 5%.

Right? JPMorgan,

BlackRock, and and all of them

want a piece. They want a financial interest in that business because that because that's where Circle and to a to an extent Tether for offshore money starts to step on their toes is making a spread

as you you know, giving an an IOU to someone that pays 0% interest and get receiving 5 for yourself is It's a pretty good business for a 70, you know, $70,000,000,000

of funds, 20 $40,000,000,000

of funds.

So even though Circle's fine. Right? Like, USDC should probably it's gonna probably get trade back to a a buck.


And you'll be able to get your money out if you want,


unless you about that.


Who knows? I I mean I mean, I would it surprise me to see a rug? No.

But, yeah, I think just in general, we're gonna see more of a

clamp down, and the access to USD rails

for a lot of these companies that weren't compliant of with law or, yes,

unregistered securities or whatever it may be, are gonna have trouble getting access to USD rails.

Yeah. Real trouble. So I think it it'll be interesting to see who steps up to the plate. I think next bull run, you're gonna see those, you know, legacy incumbents.

They're gonna really try to try to get in on the Bitcoin side of things,

in some way, at least, you know, whether it's banking companies or whatever else. Right? Because there's gonna be another bull cycle, and there's gonna be another crypto native credit boom. But I think it'll be, to an extent, a less lesser of a wild wild west,

and more so, you know, they'll try to implement regulatory capture from the start,

and KYC being obviously one of those processes.


Yeah. I mean, if you look at no matter how this plays out,

I mean, you gotta just follow the incentives. Right? And if you follow the incentives,

even without additional regulatory capture methods,

we're probably gonna see consolidation

on both fronts, both in the traditional banking sector


Bitcoin on and off ramps. Right? So, I mean, when you talk about

well, first of all,

I don't really think this helps much in terms

of confidence in the traditional financial system. So

there's a lot of people that already placed wires to try and transfer to the big banks,

that they think are, quote, unquote, too big to fail and will get bailed out. Those people aren't gonna pull back their wire.

Right? So we're gonna see a lot lot of consolidation there. And then on the Bitcoin on ramp off ramp side,

I mean, when you start to talk about Silvergate, when you start start to talk about signature,

less so SVB because they actually were, like, kind of picky and choosy on on who they banked in the Bitcoin and and, quote, unquote, crypto space.

Those were mostly for, like, the smaller fringe players.

If you start to look at the established people, right, like, I believe Cash App uses maybe Sudden and Cross River, I think, are what they use. Like, Robinhood

is got all these major banking relationships that they already have.



you know, is is in with the big guys at this point.

It's really the smaller there there'll be way less competition on the on ramp off ramp side. Like, I expect there to be massive consolidation there, and then that makes our on ramps off ramps even more vulnerable than they already currently are. Right? Because

these are heavily regulated companies. They're massive companies.

There's a lot that governments can do to,

to threaten them and, compel them to do certain





What are the days consolidation?


Alright. I was reading a little bit on the side.

It was this this is Bloomberg's,

chief, fixed income strategist,

talking about the the new treasury fed facility.

And it the the Fed's allowing the banks,

to to, post their their bonds as collateral in exchange for, liquidity, and they're valuing the assets, mortgage backed securities,

and treasuries

at par value.

So not the value at market market, but the value that it was. This is just an accounting trick.

And and liquidity credit extension is is just is is essentially the money supply, right, which is why defaults and and default cap leads contract the money supply. So this is I mean, that I think this and what the guy said, following that as he he posted the, you know, breakdown of the facility and what it is and then saying, you know, the the assets will be valued at par. He said, if I wanted to dream up a version of a rescue that would allow the Fed continue hiking and ignore this mini crisis,

I'm not sure I I could've done a better job than this reality.

So so, you know, the money supply essentially quasi increases. You know, they backs up this liquidity. It doesn't get destroyed and go poof.

So markets rally, risk rallies, Bitcoin rallies, equities go up.

But, you know, they potentially can continue to,

you know, whether the people think to pivot, this is, like, more of just, like, a little mini bailout,

which is printing money.

I wonder what the extent that their balance sheet will increase,

based on this.

But, yeah, let's


continue. Let's unwind this unpack this for a second because, I mean, I'm a little bit confused, which means the freaks are confused.

So with SVB,

Silicon Valley Bank, one of the reasons they failed was because they my understanding is because they had these

10 year 10 year bonds and they had,

they had 10 year bonds. They had, like, 10 year mortgage backed securities and stuff, and they were paying low

rates. So as a result,

their current value is they they have massive losses on the current value,

and they they didn't have to mark to market. So they didn't have to say that they had current losses on it. They only have to say it when they actually sell.

And then so then they were forced to sell because they were trying to cover their deposits.

And as a result, they took heavy hits. What the Fed is saying now or is it the treasury whoever is saying someone's saying right now that

they will they will treat those as if their full value instead of

the the current market rate for them,

the current market price for them. Is that that's what they're saying?


Yeah. They're they're saying they can bypass the,


the mark to market price. So who pays the shortfall?


Well, the short the shortfall is that the the mark to market value of the bond does not act actually have to be realized through an accounting trick where the fed values the collateral.

So that that I mean, I guess the shortfall is that, you know, as depositors are are are made whole and if if they need to withdraw, right,

Like, you know, what what panicked everybody about Silicon Valley was that they sold the bonds

so that, you know, that at magic accounting where, you know, these 30 year bonds, 20 year bonds, 10 year bonds are valued at,

you know, a 100% of what they were lent plus the 1 or 2% interest payments for the next 10 or 20 years.

They were they were marked at their fair value when when a 100 is a bond issued when rates are at 6% or when rates are at 5% for you know, or 6 7% for mortgages.

So a 100,

that that's the baseline plus the 7% interest rate. So your, you know, 1, 2, 3 percent yield

isn't worth a 100¢ in the dollar when there's 20 years of that duration. So so the Fed's basically saying, you know, we'll ignore that for a year. I think they are are up to a year, their credit extension facility,

and and you'll be able to that collateral will be be valued at at par

before the the duration drawdown. And so,

yeah, I mean, that's it's certainly interesting how fast they reacted.

Markets are loving it.

But I I think it gives them you know, they're gonna they're gonna continue to tighten. I think this mini crisis will be kinda like a line in the sand,

just like the from their response from last time. Like, they, you know, responded. They did tarp. They did all this other stuff, but markets didn't bottom right away. Not saying, you know,

short sell stocks or buy puts or whatever, like or don't have cash or have cash. I think people often, like, take

some of these statements too literally, but,

they're gonna continue to hike in my estimation, and it's gonna

probably take a couple more little tumbles before, like,

what what we think of as a policy response normally will occur,

because the world doesn't work. This this this step based system won't work for long,

with actually restricted monetary policy. And inflation is pretty persistent, and I think it stays persistent. So whether they actually, you know, take off that 2%

mandate or whatnot

or they actually get that if if inflation gets back to 2%, the economy is extremely ugly. That's how hot everything is. And so the in in pursuit of that mandate, I think they're gonna they're gonna blow some some stuff up. I think this is probably, you know, one of the first things we see blow up in the


states. They've been blowing up a lot of shit.




Blew up I mean, inflation is still running extremely hot.


Yeah. It's people thought it was, like, more They haven't blown that up yet.

Yeah. They haven't.

And what would have helped blow it up is, you know, if all these,

depositors didn't have their money, but, obviously, they they didn't think that was politically palatable,

which I guess you could have expected.

I think we said last in the last,

episode 2 months, we're like, they're gonna get their money. Right? Like, we talked about Matt and I literally talked about bank runs,

about there being 2, you know, a $100,000,000,000

of FDIC insurance for $9,000,000,000,000

of insured deposits.

Just talked about social media being a super spreader for bank runs,

and how, you know, trust and confidence is a fickle thing.

And then we said, yeah. And then it's gonna it's gonna blow up, and they're gonna get bailed they're gonna get bailed out, and the loss is gonna be socialized.

I didn't think it would happen. We said we thought it happened internationally a bit domestically.

And it happened domestically first, which is quite quite, you know, amazing.

Not rooting for anything bad, obviously, but

it's, you know,

the left bell curve Bitcoin

Bitcoin Maxi Instinct

is remarkably right sometimes.


Yeah. Definitely left curve. I mean, so the

I mean, European markets open 1st. European banks open 1st.

Does yeah. We have USCC

back on par.

Do do we see do we expect to see

bank runs over in Europe over this next few weeks? Like, is that is that

I assume a lot of Europeans are aware of the issues that are happening here.


I'm not sure how,


European How do you think this all plays out over the next few weeks with with everything we know now? Japan opens in 50 minutes.


Yeah. I mean, I I dude, I'm not sure. I I just expect some some,

some shit to get messed up.

But this is a they certainly reacted pretty fast here,

which is fascinating. I think you USDC on my ticker is not 98¢, but maybe that's not updated,

on the Coinbase pair.


yeah, USDC

probably I'm gonna be fascinated to see how much of their portfolio is redeemed

because of trust gets shattered.

And and, you know, maybe the SEC even steps in. Right?

Because they they basically called Paxos' instrument of security.

Their Paxos issued b BUSD. You know, Binance's USD stable coin that wasn't theirs. Right? Because Binance can't get a

you know, isn't a US regulated financial institution.

And so maybe this is, like, one of the things that they come

come, after circle for. Because something that's trading at 98¢,

whether that's their fault or not. Right? They're issuing this thing on a blockchain.

They have money in a bank, and people are literally buying this, like, you you know, the SEC's Howie test. You know? If you if something has an expectation of profit, people are like, oh, stable coins are not you know? At $1, no one's buying an expectation of a profit. But, like, the whole timeline for crypto Twitter this weekend was, like, buying the dip on USDC to, like, make it all back on leverage. Right? Like and so it was pretty funny just, like, how this stable point now is, like, people are buying it on an expectation of profit.

Not saying, like, I hope the SEC or anyone else comes in, but, like, come on, guys. I think the writing's on the wall for a lot of this stuff.

But I, you know, I wouldn't I wouldn't be surprised at all to see it go back to par, and there for for there to be a hell of a lot of redemptions come come Monday, Tuesday

in terms of, like, you you know, USDC supplies at 40,000,000,000.

What's the over under for the end of the week?

That's a great question.

What do you think?


I think you have to be batshit fucking crazy

to be holding any significant amount of USDC right now. I mean, I think you had to be already, but especially now.

Yeah. Like, that doesn't

it just doesn't

it doesn't compute to me, but, I mean, there's a lot of idiots out there.


I mean,

I understand, like, the emerging markets, global south narrative. Like,

people demand dollars in places where they can't get dollars otherwise, and I'm sure a lot of them rely on USDC.

And that makes sense to me. Like, you have no other option. Hopefully, they're holding a a portion in Bitcoin.

Hopefully, they understand the risk they're taking, and and they just want that US dollar exposure.

But that can't be the overwhelming majority has to be big funds, right, that are holding USDC.

Like big traders, big funds, institution kind of level stuff.

And, like, they must have better options. Like, why


why hold why hold this fucking? Like, USDC has all the counterparty risk that banks have,

and then it's added it's additional risk added on top.

And then you're also not making any quote unquote yield off of it. Circle gets off of it.




Unless you're holding it in, like, Coinbase, and then Coinbase says if you hold USDC on Coinbase, you get

Coinbase fucking counterparty risk.


Yeah. I I I don't really get create all the stablecoins either, but


I mean, the bullish Bitcoiner in me

says, like, this is Bitcoin

Bitcoin like, the moment for Bitcoin, and,

you know,

the bear goes into hibernation, and we just start fucking ripping.

But I'm humble enough to remind myself that that's probably just Moonboy bullshit, and I'm wrong.

But it's gotta be the

curtain draw close off moment for


Like, how is, like, how is it not for that? Like, I mean,

it's one thing if you're keeping $2,000,000

in Citibank or JPMorgan

or, you know,

Wells Fargo or something. But

to to keep

$2,000,000 in USDC or $5,000,000

in USDC or

$10,000,000 in fucking USDC just sounds crazy to me.

Who are these people?


Yeah. It's a great question.

I'm I'm not very I'm not very sure, to be honest. I don't in a zero interest rate policy world, having stable coins, you know, as long as you're not,

like, doing anything and I say doing anything illegal, like, in the sense of where you you can get those funds arbitrarily frozen. Because, like, otherwise, they, in theory, shouldn't freeze them all that much. Right? Like,

but I get having ease of use, you know, unchained dollars

in a world where policy rates are 0.

But having USDC on Coinbase getting 2%, it's just like it's just a game of Hoopla, in my opinion. Just holds hold cash or hold Bitcoin.


You're better off holding t bills in whatever brokerage account you're using.


Yeah. And this is, you know, Matt, this is obviously a very western perspective. Shout out to the plebs out there that will never buy T bills. What I'm saying. You know?


Yeah. Yeah. I mean, I'll never buy T bills. I don't even know how to buy T bills.


It's a good point, Matt.

The SDC at 983.


But that's what I'm saying. Like, the the global south emerging markets idea of stable coins, like, it makes sense to me as long as they understand the risk. But it's just not the majority of holders. Like, it just can't be.

And it just does not line up that way


I mean, we gotta stay on the stream, Dylan, because who knows what's gonna drop next?


Yeah. I'm this has been a fun it was a good good idea about you. We were originally gonna stream at 5,

to all the to all the freaks out there tuning in.

And Matt was like, no. Let's do let's do 6 PM because futures are gonna open. And I was like, it's the best day that's the best idea you've ever had, Matt. It's good.

You're you're all over the market these days.


There you go.

I know when I know when foot's open, but

I don't I don't really understand them or how any of this shit works. I just know that Bitcoin is awesome.


What else beyond the docket? I We had a few we had a few more



I don't know, dude. I just I mean, first of all, this live chat is fucking hopping. So if anyone wants us to cover anything in the live chat, just let us know.

I mean, Dylan already went over this, where the safest place to hold cash is.

I mean, if you're under 250 k

in America, you're probably safe wherever

because the government will just backstop you.

But don't, like, don't like see bills.


Well, yeah, I mean, again, people are gonna give me shit for being, like, having it's funny too because, like, this has been covering kind of, like, a little bit of both worlds. Like, I'm naturally a Bitcoiner at heart. Got orange pill. I said you know, I dropped out of school, said screw it. I'm gonna do this Bitcoin thing and figure it out. And, you know, I moved to cover, obviously,

which is what I went to college for. It's what I was originally planning to do is be, you know, be some Wall Street yuppie.

So the bonds and interest rates and all that sort of stuff, you know, were fascinating to me. And so the macro people are like, oh, you've done Bitcoin.

Like, why would you hold any of the and, you know, any of that while my, like, you know, my net worth was a 100 percent 110% Bitcoin?

And now I still have a whole lot of Bitcoin, and I have some cash

too. And the bit the Bitcoiners are like, you idiot.

And so it's just it's just funny. I love

it. Get it both ways.


Yeah. You're getting grilled on both sides.



I feel I sleep really well at night.

And and, honestly, there's nothing more,

assuring than a a fat stack of Bitcoin that you know how to access that your loved ones would know about in a case of an emergency,

that that, you know, you can walk around in your head if you were motivated enough and access your wealth anywhere in the world. It's a really powerful feeling.

And so I encourage people to to to really

if even not if you don't take a leap right away, you should really learn about how self custody works,

how to do it.

And because that that's quite a powerful thing. We're we let you know, we talk a lot about in I guess, like, I talk a lot about, like, you know, investments and performance in markets and stuff. And you've been and, Matt, like, you and Marty were, like, really, instrumental in a lot of a lot of my teachings from, like, a tech perspective because that wasn't my,

that wasn't my background.

And that's one of the coolest rabbit holes to go down,

As someone that's fascinated in markets too, but, like, dab you know, I've increasingly dabbled in the tech side of things.

There's no there's no crazier feeling than send you know, sending some on chain Bitcoin

with a, you know, software note that you set up and verified yourself

as a kind of volunteer participant in this open global network. Like, grasping that is just like is like a the first time you do it is a pretty mind blowing thing,

especially in the light of all these centralized counterparties increasing

increasingly failing. It's it's, you know, just a wonderful, beautiful dichotomy

of world views.

And so, obviously, as westerners, we can live in both worlds,

but, you know, a lot a lot of the world doesn't have that privilege.


Yeah. I mean, I look. Self custody is truly empowering.

It's really cool. You know, I've done a lot on the education side. I've done a lot on the education side, and it's pretty cool seeing it light up for people.

I will say, like, on a personal side,

I mean, I had a I had a friend over today who already kind of understood Bitcoin, but he rushed over today because,

he had a lot of money in a personal account in a personal bank account,

and he saw everything happening.

And he wanted to, like, set up his cold card finally and and, like, hold his own keys and get through the process.


you know, he goes to press,

he goes to press withdraw on

the brokerage account that he was holding his Bitcoin on. I'm not gonna dox which one that was.

And it said, oh, you have to verify your identity. And then he verified his identity. He's like, we'll get back to you in 2 days.


for all the newcomers out there,

I think it's an important time to remind you remind

you that

if you're considering

adopting a better money such as Bitcoin,

Whether you go to KYC or no KYC route, it's

gonna be a slow process that you have to get comfortable with. And then,

you know, if you're using a KYC regulated exchange, they're gonna they're gonna require you're gonna have to ask their permission to to get your Bitcoin. So it's gonna take some time.

So get your act together. Get it together sooner rather than later because when you're when we're actually in a crisis, it's gonna be too late,

and you will be fucked. So, hopefully, it woke up a lot of people, and, hopefully, now they have a little bit more time to actually get their act together.

But also on the flip side, if you're expecting this to have a substantial impact on the Bitcoin markets,

it will take a little time for that to play out. Like, the guys the VCs that are all freaking out,

if they decided that now they wanna put some of their corporate treasuries or their portfolio companies and corporate treasuries into Bitcoin,

like, it's gonna take them some time to do that.

So that will be a lagging that's kind of a lagging kind of thing.

But it was pretty cool watching him, you know, set up his cold card for the first time, and then and we just followed my guide. Like,

we run,

so it's available for all you.

If you're trying to set up your cold card for the first time, it's easier than you think. I like this question from,

I like this where is it? So many questions. One smart fella. You guys, who's responsible for the hash rate ripping, and why is it Russia?

Great question.

That's funny.

As everybody It should be interesting. Conference we're having. The nation state

the nation state game theory gets really interesting here on,

the Bitcoin side. Because as trust erodes,

you know, the nation states, especially the nation states with sovereign wealth funds,

they gotta be starting to ask themselves how exposed they are to counterparties.

And, you know, putting 1% or 5% or 10% or everything into Bitcoin

doesn't seem so crazy anymore.


That yeah. I mean, the real fun is, like, you know, if they put 1% or not even 1% because they couldn't even, in their wildest dreams, get 1% of his capital without absolutely ripping the price. So maybe that's what they're forced to do. Unless if they have. Fun part.

Yeah. True.

I don't know if you Matt, I'm I mean, I'm sure you've talked about this a 1000000 times in other episodes. Maybe you haven't. But I'm not familiar with your thoughts on,

Jason Lowry and his whole thesis and,

you know, recent book and,

you know, supposed talks with the Pentagon and White House or whatever.

I don't know if you even wanna touch on that, but what are your thoughts?


I usually just try and not give him any airtime period.

I definitely did not pay for his thesis.

No desire to do that. I'd rather stack sats.


Someone spooked. I, Yeah. He's quite lit quite literally spooked.


Yeah. I mean, if you looked at his LinkedIn, he has a top tiers spook,

resume. And he's, like, been at all the agencies.

I don't have LinkedIn, but I've gotten screenshots of his LinkedIn.

But, yeah, I mean, he's a professional spook. He literally is. So that's not

a a rumor or something to that regard.

I think it's dangerous. I I think words matter.

I think Bitcoin

Bitcoin, the protocol, is robust and needs to be robust

to to nation state attacks, particularly censorship.

And I think Bitcoin is is is well situated in that role. I mean, if you start to talk about financial regs and stuff like that,

you know, it's a long arm of the US government. Right? They went after BitMex and the Seychelles. It doesn't really matter where you're located.

They will come after you.

So if we're actually gonna be trying to build the base of a whole new distributed censorship resistant financial network, it needs to be robust

and and protected from attacks. And so it doesn't really matter what people say on Twitter or their thesis or whatever in terms of Bitcoin,

the protocol.

Now for individual Bitcoiners that are living in America

like ourselves,

words do matter.


referring to Bitcoin as a weapon


line of reasoning and and narrative adjustment. And and Yeah. I would say that I say that as someone who I believe Bitcoin is a defensive tool. I believe Bitcoin is a defensive tool for property rights. I believe encryption is a defensive tool for freedom of speech.

These aren't offensive tools. You, you know, you you can't kill anyone with a Bitcoin.

These are not, you know, weapons of war.

But if you start going down that rabbit hole if you start going down that narrative line and you start getting other Bitcoiners to agree with you and start parroting those kinda lines,

it becomes much easier

for the US government specifically

to target Bitcoiners,

and hit us with onerous regulations and make our lives really, really fucking difficult. And I really feel like that is what he's doing.

It kind of seems almost too obvious, but that's what makes it effective.

And it yeah. It's it's just it's extreme it's extremely dangerous. And I would say I say this as someone who I've said many times.

Financial crisis happens or it seems like it's happened. It's happening. Right?

Like, it's happening dot GIF, like, we have Ron Paul.

Like, we are the easiest scapegoats.

The US government shut down small businesses. Small businesses are the most loved

sec sector of our economy, period. Everyone loves their small business. Everyone wants to go to Main Street

and talk to their local fucking

bar barkeep

and and and frequent them and and support them and do all this other stuff, and they just turned a blind eye when all those businesses got closed and their livelihoods were taken away. If you don't think that people will just

easily throw Bitcoiners under the bus, if their bank deposits are getting rough while hyperinflation's

happening and they can't withdraw cash.

And and talking heads on CNN are saying the Bitcoiners are all gloating on rabbit hole recap every week. Like, that is,

like, just a recipe for targeting us. And you add in, like, Bitcoin as a weapon, and you're, like, waving around a fucking handgun

on on podcasts. Like,

you're just you're just setting up that narrative.


Yeah. I mean, that's gonna happen in, like, you know, 4 years or something.

No. It's the best. Maybe aggressive.

But that's good. I mean that. Like,

everything well, 4 years that

2027. I I I pulled that out of my out of my ass respectively,

respectfully. But

it's it's it's going at, like, the mandibles,

the you know, and maybe this is a pessimistic thing. But

yeah. It's gonna, like that's that's obviously

the trend. Right? Is

this in you know, for 40 years

post you know,

we went 71. What what what the fuck happened in 1971,

the website,

pretty cool. A lot of those are coincidence,

or or, you know, maybe just kinda like a trend,

for for money in society. We had, you know, globalized the world. Inflation is super low for this one period of time,

as the world was industrializing.

We've kind of, you know

And maybe if some people say globalization hasn't talked, but it's clear that we've hit some sort of inflection point. It that, you know, the pessimistic side in me says, well, geopolitically, it looks like we're headed for some form of you know, not World War 3, hopefully, not a hot war, but at least somewhat of a cold war,

and and all these, you know, national interests are kind of, you know, saying me first for the first time instead of,

opening up to the world, that's gonna lead to more and more inflation.

And the debt and the demographic side everywhere in the world is ugly. And so these are kind of things that, like,

all of the the virtuous cycles that we saw the last, you know, 40 years that people expect as normal. Like, living standards only go up, and wealth only goes up.

Stocks only go up.

And and it's it's like, you know, this kind of peacetime thing. I think you're gonna get maybe get their face ripped off in the 20 twenties or 20 thirties.

Who knows when this happens? But, like, I we I don't think we've hit the,

the the point of max

not max pain, but



I think we're still on the the, you know, kind of the escalation phase, acceleration phase, and we haven't hit that crescendo.

And so maybe that's a pessimistic take, but, like, all you know, that that thought of

of, you know,

accelerated inflation where Bitcoin is pushing, like,

maybe it's approaching 7 figures, past 7 figures.

And and I suspect that 7 figure Bitcoin whenever it does hit,

which I do expect in my lifetime, the buying power of those dollars will be a lot less than a1000000 today.

And so the Bitcoiners will be saying I told you so and and, you know, or at least thinking it,

at a time when there's probably gonna be, like,

you know,

incumbent power structures that are that are failing or failing.

And it's gonna be quite the, like,

the dichotomy. And, yeah, we are I think it's it's clear that, you know, propaganda will come.

Bitcoiners will be demonized.

But I think that's probably just a bump a bump in the road, but that's coming. Like, the timeline is unknown. But I I I fully fully am in, you know, in line with you on that being the trend. It's quite obvious.



Well, I mean, I think part of the thing is, like, if and one of the reasons I focus on education so much is I think if

if if we can help if we can help more people

use the tools before this kind of chaos starts to really unfold hard,

there'll be a lot of people out there that are very grateful they have Bitcoin as an option.


I just don't think we're gonna,

and maybe this maybe this is the pessimist to me too. I I call myself

a doomer optimist, and I just I I think


like, as people get burnt, it would fuel better alternatives. But I just don't think


I I think shit is breaking faster than

people are finding the alternatives,

like Bitcoin.


And that just seems like the realistic expectation, and it, you know, kinda is what it is. We have a question in the chat

for you, Dylan.

Your thoughts on synthetic USD like StableSats as an alternative to Stablecoins. Do you have any thoughts there?



is that the,

what's StableSats?



is what's run by Galloy money,

and it's this idea of a pool that goes short,

they go short dollars.

Yeah. Yeah. Like, Okay Coin and stuff. And then so people get, the equivalent of a dollar balance in their wallet,

but it's really backed by

Bitcoin long positions.




Bitcoin. Yeah. Bitcoin shorts.


The like, you know, Bitcoin They are backed by Bitcoin shorts. Yeah. People are inherently

short Bitcoin.

The the user that's holding the dollar balance is short Bitcoin,

and the person that's backing it up, the market maker, is long Bitcoin.



I mean, I think it's a cool cool concept. The goal the golden goose for, like, you know and again, this is just like a a temporary solution

to people wanting dollars. It's like, you know, a quote, unquote, like, decentralized

Bitcoin futures market

where where people can hold synthetic dollars. Like, BitMex, you know, you can hold a dollar position because you could just short Bitcoin on one x. That would like, Arthur was, like, the first guy to figure that out.

But it's centralized, and so no one's been able to figure out a decentralized thing. And there's kind of, like, an implementation on Ethereum, but from Ethereum's core,

it's not as decentralized as Bitcoin, obviously.

From a monetary policy perspective about MakerDAO?


I mean, MakerDAO,

I mean, DAI being an over collateralized pic,

over collateralized stable coin

with It's collateralized




Right? Yeah. Because they collateralized it with ETH, but it's too volatile. I you had to put up too much there. It's like, oh, yeah. We'll just do USCC. So, there's also, like, you know, perpetuals and whatever.

But no one's been able to really figure out how to do it in Bitcoin.

We don't really need to. Like, I think you're gonna be finding implementation built on lightning probably.

That looks like it's happening.


But yeah. So there's an interesting one. I mean, I know the question's for you, but

the freaks know I'm extremely bullish on Fedimint, the open source protocol.

And there's this concept

there's a concept with Fedimint. So the idea of Fedimint is we have all these different Fedimint. These essentially multi sig custodians that are located around the world, and they can be small community fediments. They could be larger fediments.

And within those, you could have stability pools

where it's similar to StableSats, but instead of relying on a,

centralized exchange on the back end,

it's all done within the Fedimint. So some people are going long Bitcoin and then other people are pegging to the Fiat.

And the nice advantage there is, obviously, you still have counterparty risk.

You still can get rugged. But one of the big issues we're seeing is


the existing stable coin market as we currently see it,

is a winner take most. People want liquidity.

People want liquidity, and they want reputation is basically the two reasons that people will choose a stable coin. And as a result, we've seen Tether dominate because Tether is inherently black market money.

You know, they they have been fighting the US government since their inception. They got created in the first place because there was a banking blockade on Bitcoin businesses,

and they needed an alternative

for on the fee outside of the equation.

And then we have USDC on, like, the heavily regulated Cox side that people like that is backed by, like, BlackRock and Goldman.

And as a result, they've taken the lion's share of market. But what that means is they're massive targets.

They're massive targets. They're they represent systemic risk to everything,

not just the Bitcoin,

industry. I mean, I think circle goes down. Like, that's massive contagion effect across fucking everything.

And they're massive targets to the US government. So if you have smaller liquidity pools, stability pools

located around the world, then if one gets rugged or another one gets rugged,

it's like small regional bank failures. Right? Yeah. It's not like a too big to fail kind of situation where you have everyone get rugged at the same time.



Matt, what do you think about what do you

this is a a tweet from I'm sure you're familiar. Ryan Selkis,

CEO of Messari.

Tweets out crypto banking rails have been effectively shuttered in less than a week. Next up, USDC.

The message from DC is clear.

Crypto is not welcome here. And then the second tweet is, the entire industry should be fighting like hell to protect and promote USDC from here on out. It's the last stand for crypto in the US.

Do you do you wanna share your thoughts on that, or,

do we


I think first of all

I think first of all,

the only true stable coin is Bitcoin.

I've been

screaming that at the top of my lungs for fucking years,

and I think it will become obvious to more and more people.

It's a proper stable foundation.

No one controls it.

You could spend and save without permission.

It is the most stable thing that exists on this fucking planet on a financial perspective.

It's property rights enforced at the at the code level.

People don't realize that yet. But I would say,

there's a tweet that I resurfaced from 2018,

or 2019. It was when USDC launched. Everyone was I don't know if you remember. I don't know if you remember back then, but, like, people were really excited about regulated stable

coins were the future. Like, that was gonna be, like, our future.

And people have just completely lost the fucking plot.

Like, the whole reason

if if if if if governments and corporations

could provide us with property rights

and a stable money

and protect our speech, we wouldn't need any of these tools.

We don't you don't need FreedomTech in those situations. They'll just provide it for you. The whole reason is they've fucking broke everything,

and they will continue to break everything.

And you can't build things

with the expectation

of of getting permission.

You can't build things that are not robust and secure


from external forces in the first place.


you know, all these people have completely lost the plot.

We discovered this this native digital bearer asset that is censorship resistant, Bitcoin.

And then everyone decided

to build digital IOUs that require trusted third parties

and call that the future over Bitcoin and just completely went full circle back to a pre Bitcoin kind of situation. So I think all these people are gonna get rugged. They're all gonna get fucking wrecked, and then people don't realize. And it's gonna take a while. It's gonna be super painful. And I thought this week was gonna

teach people a lesson, but if I mean, I'm sure you got plenty of fucking engagement

off of that. People are like, this is our last stand, like, we gotta protect USDC.


Yeah. You know, maybe you guys get bags.

Well, yeah. I mean, USDC is back back close to,

close to a buck or whatever.

I don't think I I don't think they learned their lesson per se because they that spells out. But,

Yeah. I I I think Circle might

be taken out and, you know, shot behind the shed by the authorities or regulators on terms of, like, you know, they're like you know, where they could say, like, AML, KYC, whatever.

Because, like,

again, there there is somewhat of a choke point going on for despite Bitcoin pumping, you know, in the last hour and a half. Right? Like, I you know, Bitcoin going pumping from 2020

k to 22 k. Like, okay. You know, we're still kinda the same place for last 9 months, which is great. I own Bitcoin. I own a bunch of it.


like, there's a there there

yeah. It is good. I need more, though. Never know.

But there is a choke point going on, and I think that's

the thing

that, you know, may earn may not be priced into the market and, you know, also is probably the biggest

gonna be the biggest, like, headwind

for the next year is, like,

okay. How does the next because I do suspect there's gonna be a $100,000,000,000

of plus of capital that's gonna be put into Bitcoin in the in the coming

years. Right? And that's gonna lead to a much more than greater than $100,000,000,000

of appreciation in the market cap. You know, the market cap's gonna go up by

trillions, and I I suspect eventually. I don't know what timeline. That's unknown.

But how those rails how that next 100,000,000,000 comes in? How well, first of all, how's the next billion? How's the next 10,000,000,000?

Then we can talk about a 100, but I do suspect a 100,

and then much, much

more. How does that flow into Bitcoin? And that's probably, like you said, the regulatory capture part of it that's in place. And that's gonna probably, you know do they have it set up for the 2024 halving to pump our bags? Who knows?

But that's their plan is for the incumbents to eat all this and,

you know, no new kids

get any of the any of the fun. We they had the 2017 and 2021 cycles to have their fun, and the next time, they're gonna try to have it under wraps. I think that's what's kind of happening under the hood.

Because they will they while,


we're on air.


They will pump our bags. I have,


your your multi multifunctional.

I, there's 3 paths for you to from a practical perspective, there's 3 paths for USDC.

They either get rugged because of counterparty risk,

and and are insolvent. Right? They either get completely KYC cucked and permissioned,

right, where it essentially becomes,

you know, a a quasi CBDC,

you know, not necessarily directly run by a like, a private CBDC, not directly run by the central bank, but there's massive surveillance, there's censorship,


lots of permission, completely lost a plot in that situation,

or they get shot behind the shed because they don't do that.

Right? Those are the 3 paths for USDC.

All three of those paths are fucking horrible and not why I'm

part of this movement. Like, it's it just doesn't

that that that's what are we even building here? Like, what what what is even the point?

Yep. I might as well just use fucking Venmo.




Love it.


Awesome, Dylan. I mean, this was a great rip.

I didn't expect USDC going back to par,

while we were on air. I didn't expect signal to cancel that while we were on air.


Yeah. That was wild. Did you expect a bailout or full bailout?


You know, they were kind of positioning this, which just it's not it's

they're gonna be very clear that this is not a bailout.

This is depositors getting

Yeah. Money.

Right? And they they were kind of

at least I saw, like, some kind of positioning about that, like, oh, backup depositors, but don't actually bail out the bank. Don't actually, you know, protect shareholders and management and whatnot.

But, no, I didn't think they could move this fast.

Lucky it happened on the weekend and everything shut down

just because they always shut down on weekends, which is still crazy to me.

But It's crazy now. It's like I expect that the agent is still spread tomorrow morning. Like, I don't think I think people are scared,

and I think they should be. Like, I don't think

the money in the bank is not yours. I think every bank is is

every fractional reserve bank, which is the overwhelming majority of them,


is inherently insolvent. And,

how do people watch this last week? I mean, some people didn't even see it. Right? We're in our own little bubble, but

people are gonna wake up. Social media is gonna spread it.


they're gonna have some really major

they have major systemic

structural issues here that none of this solves. This is all just kicking a can down the road.


At best. It's At best, it's kicking a can.


Yeah. The people are, like so

the the facility they just set up where, like, the banks can lend against their their,

long duration securities at par value for up to a year, It's like implicit QE

in a way, at least for, like, a year, and it allows a can kick. So, like, if they had this policy up by last Wednesday,

Silicon Valley Bank wouldn't have gone under

because they they're they they were,

you know, fiat accounting

standard solvent

mark to market,

as $42,000,000,000

of withdrawals were coming, they were not solvent.

So, I mean, liquidity can't solve a solvency problem, but it was a liquidity issue because, again, it's a that duration mismatch. So mark to market, their books, they were solvent. But when you actually need to sell the securities

that have an unrealized loss, well, you're not.

And so this kind of, like, if they wouldn't have failed, Silicon Valley Bank wouldn't have gone wouldn't have zeroed.

Signature, I think, was a was a KYC AML thing, and,

increasingly, they were looking like they were going to to maybe suffer a similar fate if there was a panic, which there was, which is why they got wound down. But,

you know, aside from, like, maybe there's, you know, 1 or 2 other banks that are bad and who knows what panic happens this week or in the coming months,

I think this facility will allow some of them to potentially escape that in the near term in terms of a bank run, which will allow them, I think, the entire purpose of this is to allow them to continue to just

to tighten.

They're gonna continue to to jack rates up because, you know, this would have been a decent you know, like, the market was saying, oh, you know, they gotta cut now. They can't. And they, you know, they made the depositors whole. Bank 0ed.

Right? Like, that's I honestly, it's from a Keynesian economic perspective,

it's a pretty good play. The Austrian, anarcho capitalist

in me is

like, screw them, bail out no one, assume your own risk, you're an unsecured creditor.

I'm not ruined for bailouts or not. It's just as part of the system, and I can't control it, so I don't really

care. Yeah. But it's a pretty it's a pretty good Canadian

Band Aid.


As someone who's already opted out and essentially

a 100% in Bitcoin,

if you if you base also, like,

all the time and effort I put into

the Bitcoin movement,

I'm probably way over a 100% all in.

Mhmm. I've already opted out. I don't really care if they fucking

debase the money.

I actually like, it's kind of

I had some friends affected by SVB. I told you already the friend who it works in a non Bitcoin startup, which she just wasn't gonna get paid or payroll.

So, like, at least they have a little bit more time to get their shit together.

From, like, that perspective, I guess, like, I'm I'm not rooting for, like, people to lose their money in their homes and their jobs.

But it should be I mean,

this has got

I I I imagine this has gotta be a wake up. I mean, so going back,

pre pre signature

getting shut down, like, an hour ago,

pre Silicon Valley Bank run, which was

like, basically, Peter Thiel just was, like, withdraw all your money, and then everyone just fucking ran the fucking bank.

We had Silvergate,

who doesn't seem like they had any

really duration mismatch or anything. It seems

like they were almost They did. Fully reserved.


Yeah. They did have it. That's why the stock they they had to liquidate a long portfolio, but then once they did, they had enough cash, like, in January.

But then They survived left in there. Depositors


yeah. They survived depositors removing 85% of their funds.

Yeah. Right? Like, 1,000,000,000 of dollars was withdrawn from that bank,

and they still survived, and then more money came out.

So, like, how many banks can survive that? Not many banks can survive that, and people are not gonna stay in regional banks in this situation. People are not gonna stay in the small banks. Like, they're they're everyone's gonna be moving to the big guys or, you know, the few of us moving to Bitcoin.

You're not already there.

And they're all gonna do it from their phones and they're you know,

it's all gonna be wires. It's, like, the new bank run is just the wires and, like, ACH and shit. It's not people, like, going to the bank and pulling their cash out.


Yeah. They they So expect I don't know. I

I would imagine that,

I mean, they they said there's a $25,000,000,000

fund. I I I do suspect that there's gonna be something that we probably can't predict whether it's,

you know, pensions or, you know, insurance or you know, the the fact that, like, you know, maybe USCC gets redeemed and liquidate a bunch of treasuries. Like, this is still a pretty illiquid market everywhere.

We are still going through lag effects of the biggest asset bust in aggregate terms ever.

You know? And this inflation thing is pretty embedded, and,

the labor market's just barely beginning to see some weakness,

which this would have accelerated. But I I

they're they're gonna have to really

kick this can, and this was just a little toe tap. You know? This is just like

they pushed they pushed they pushed the can upwards a few inches. They didn't punt it, and they're gonna have to punt, I think,

pretty pretty damn hard.

And that's when the real, like, Bitcoin's being an option is being built on the surface, and a lot of people are getting orange colored with stuff like this.

But you're gonna be able to see

on the monthly chart when people really get it because Bitcoin's once again, broken its all time high and absolutely going parabolic again. And then we'll probably all say this time is different in the type of Bitcoinization, and it'll crash by 80%.

It's probably what happens

per per per usual.

It'll crash the global economy.


Yeah. I mean, I think I would have been I would have been pretty pissed off if

they they actually, like, bailed out the bank in full.

And, like, the shareholders were fine, and management was still there and collecting massive bonuses,

because then no one learns their lesson,

which is what we saw in 2008.


This is a pretty this

is a pretty funny tweet from, from an ad on. I won't I won't list his name or whatever.

You want q e? You want more q e? You want bitty to 50 k by next week? Ethereum to 3.5 k? We can ignore that.

Run the fucking banks. They'll have to increase the backstop.

Oh my god.

The absolute state of things, man. If you want more QE, just rush.

It reminds me of the GameStop



It remind remember the GameStop situation? That feels like so long ago now.

I, I mean, what did we talk about last we talked about this 2 months ago too.

Like, the FDIC insurance is

is is, like, negligible when compared to the amount of deposits that exist.

Like, I wonder how many people are looking into that now.

Like, people must be paying more attention.

I don't know. It should be interesting. I'm I'm very glad that I'm I'm sleeping I'm sleeping in SATS,

and, I'm able to sleep easy at night. Because if I had any money

if I had a significant amount of money in banks, I'd be

I'd be really, really fucking

I'd be having a a lot of trouble sleeping.




Okay, Dylan. This is a great rip. We're nearing 2 hours.

It's a Sunday night. They're not gonna announce anything more today.

Jeremy Allaire is grandstanding on Twitter about our circle's back to par. USDC is back to par.

I've seen That's not true. It's not gonna age well.





Signature's down. Silvergate's down. Silicon Valley Bank's down. We'll see how many more banks fall this next week.

Do you have any final thoughts for for our audience?



As per our our last episode, what would I say?

You it was is, you're you're telling me to say stay humble, stack stats, and I said, like,

I don't even know. Something and acquire satoshis.


Stay humble But yeah. Stay humble and acquire satoshis or something to that effect?


It was something something dumb. Yeah. I just Oh, no. It was accumulate Bitcoin. Right? It was it was I don't know. State cloud. It was a 4 it was a 4. Bitcoin or something like that.

Something dumb. Yeah. No. This is a long game. People people will wake up to the inevitable realities that this fiat clown world eventually.

Oh. Yeah. This has been fun.


I have more for you, actually, real quick.

First of all, we have Bitcoin in the comments asking thoughts on Credit Suisse.


It's it's been dead in the water for a while. It's it's more just I mean, it's a zombie.

I don't think it's they they would you know, there's gonna be some form of merger or acquis like, Credit Suisse is more of a name at this point. There's gonna be a merger acquisition or some form of yeah.

I mean, it's kinda funny. Like, all the European banks, this is the same thing. They're all foot mark like, functionally mark to market insolvent if there's a run because they're all loaded up on European government debt by mandates. That's why their their equity is all shit because they've been long European government debt at you know, Germany's was literally a negative rate. So you pay

a $100 to get 9 you pay a $101 to get a 100 back in 30 years. Right? Like, this this and so all of those guys are are mark to market wrecked

when you when you actually

put the price where where it's trading, but they don't do that. It's like it's an accounting gimmick.

So, I mean, I I'm not like, again, I'm not a banking analyst, but,

when when people want their money and withdraw it, it certainly gets interesting and fascinating. But the fed, the treasury, these guys can play a lot of stupid games.

You're gonna hear probably a lot more word jargon in the next 2 years

as reasons for why they need to, you know, print money, which is not printing money. Right? Like, this is not a bailout, guys. This is absolutely not. We're not bailing anybody out here. But, of course, we know. We know it is.

So I don't have any thoughts on on Credit Suisse, though, or or, Deutsche. And then


last but not least, because it wouldn't be a dispatch if I didn't put you on the spot, is the bottom end?


Looks like it. Yeah. I mean, for sure, it's,

I think I like to always

I I I've learned to not, like people are like, oh, you know, you hedging your bets or whatever? It's like, yeah. Like, I can't speak of certainty. So I don't know. I will continue to have a little bit of cash and not not be a 110% into Bitcoin like I was. Maybe it's just to sleep better, but

it's it's, I like having a little bit of both dry powders,

because, like, you know, it could always be worse. But I think, yeah, it is it with 155,

that return to that level, I think you'd need to see probably

probably 3,000, 28100 for the SPX. Like, that's gonna be that'd be quite the show,

but I don't know. I can't I can't I can't speak in certainties.


Fair enough. I'm glad I asked the question regardless. Well, anyway, Dylan, thank you again for joining us.

Hopefully, we'll have you on again in 2 months, and we'll do another market update. That'll be fun.


Let's do it.

Down to make it

a kind of 2 month, 3 month thing.

Catching everyone's in a while. Fucking do it. Just


we'll make it a plan. Yes.

Huge shout out to Dylan for joining us. You can follow him on yeah. Go on. What was that? Do I do I have to stay in the lobby, like, for restream? Or is, like, for a top load or anything? Just to be sure. No. You're good. You're good. Okay. I'm just gonna thank the Freaks for joining us. You can leave whenever you'd like to leave. Huge shout out to Dylan for joining us.

Huge shout out to the Freaks who joined us in the live chat. Reminder that dispatch is an audience funded show. We don't have ads or sponsors.

It's only possible thanks to the donations, Bitcoin donations from you guys. You can donate to the show at


or through podcasting 2 point o apps. I appreciate you all. Bitcoin's the only true stable coin. Stay humble, StackSats, and I'll see you next time. Peace.