#1577 Will Clemente & Ben Harvey | The Truth About Bitcoin Treasury Companies

Will Clemente and Ben Harvey from Keyrock discuss the big report they just put together on bitcoin treasury companies, what is going on with their premiums, how to think about debt, how to think about bitcoin per share, inflation, interest rates, and where the market is headed. =======================This episode is brought to you by Figure (https://figuremarkets.com/mobile/refer/CCI3O02A), the platform to Earn and Borrow. Need liquidity without selling your crypto? Figure offers Crypto-Backed Loans, allowing you to borrow against your Bitcoin or Ethereum with 12-month terms and no prepayment penalties. Access interest rates starting at 9.9%, the lowest fixed interest rate in the industry at 50% LTVs all with decentralized custody which allows you to see a segregated, personal Bitcoin wallet with your Bitcoin in it on chain. Unlock your crypto’s potential today. Download their app (https://figuremarkets.com/mobile/refer/CCI3O02A) and take out your Bitcoin backed loan (https://figuremarkets.com/mobile/refer/CCI3O02A) at industry low rates! Figure Lending LLC dba Figure. Equal Opportunity Lender. NMLS 1717824. Terms and conditions apply. Visit figure.com for more information.=======================Simple Mining makes Bitcoin mining simple and accessible for everyone. We offer a premium white glove hosting service, helping you maximize the profitability of Bitcoin mining. For more information on Simple Mining or to get started mining Bitcoin, visit https://www.simplemining.io/=======================Xapo Bank, the world’s first fully licensed Bitcoin-enabled bank, offers military-grade security with an unmatched blend of physical and digital security, as well as pioneering regulatory oversight, so your funds are always protected. Beyond secure storage, they enable you to grow and use your Bitcoin. Earn daily interest in Bitcoin, spend with zero FX fees using a global card, and make instant payments via the Lightning Network for unrivalled access and convenience. Visit https://www.xapobank.com/pomp to join.=======================Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/=======================View 10k+ open startup jobs:⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

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• 0:02Speaker 00

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• 0:58Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode.

• 1:26Speaker 03

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 1:50Anthony Pompliano?

  What's going on guys? In today's episode, we have Will Clemente and Ben Harvey, both of Key Rock. They are here to explain to us about a big report they just put together on Bitcoin treasury companies. They go into what's going on with the premiums, how to think about debt, how to think about Bitcoin per share and the growth that's happening on that aspect of these businesses. And then we even get into the macro environment and worry about things. Things like inflation, interest rates, and the frothiness in the market. This conversation is a ton of content. You're probably not going to get anywhere else. So let me know on Twitter, once you get done listening, what you agreed with and what you didn't agree with. Here's my latest conversation with Will Clemente and Ben Harvey. All right, guys, you guys just put out this brand new report Bitcoin Treasury is uncovered, which obviously is going to get everyone real excited. You talk about premiums, leverage, and the sustainability of proxy exposure.

• 2:33Anthony Pompliano?

  Will, why don't you give us a quick rundown as to this big fat report that I read that had lots of data in it? What are like the main takeaways for people to understand about these Bitcoin Treasury companies that are now kind of assaulting Wall Street and the public market?

• 2:46Speaker 04

  Sure, yeah. What's up, Anthony? Thanks. Thanks for having us on. Been a little bit.

• 2:52Speaker 04

  Yeah, so for anybody who doesn't know, recently I joined Keyrock, the market making OTC firm. Before we get into it, you know, obviously none of this is financial advice, you know, D R research, etc. I joined both on the corporate and institutional side, but you know, recently there's been so much talk about these Bitcoin Treasury companies that I decided that yeah, I've taken upon myself to kind of get in there with with the research team and break down some of these these companies that have been more granularity than maybe I have, just, you know, kind of looking through these things at my computer by myself. So I worked together with Ben, who's who's also here from the research team to put this together. So obviously, for anybody who's been paying attention, both in in crypto

• 3:33Speaker 04

  or, you know, kind of the the broader financial markets, these, you know, are getting referred to now as crypto treasury companies have become incredibly, you know, popular. We've seen, obviously, the, you know, initially, MicroStrategy was launched back in 2020, which we can get into specifically in like, you know, the capital structure of MicroStrategy. But, you know, we didn't really see any copycats afterwards. But as, you know, Bitcoin's price appreciation has taken place over the last two or three years, it's become clear that, you know, MicroStrategy is, you know, been one of the best performing stocks in the world over the over the last five years. We have seen a ton of other, you know, called copycats or, you know, people that have taken upon themselves

• 4:15Speaker 04

  to say, hey, your strategy has been proven out. Let's let's do it ourselves. And so you can't even list on your hand anymore how many of these these companies are. And I don't even think that was true three months ago. So, you know, this has been a huge trend in in the markets. And we decided that we'd we'd kind of. Do the best that we could to break down these things, you know, how they work, um, you know, go into kind of the capital structure of these things, um, you know, look through the, you know, debt situation across all these different companies, you know, the at the money programs, and then also kind of tie this into a probabilistic view of how maybe they'll play out into the future.

• 4:53Anthony Pompliano?

  All right. So what do you like the big takeaways as you looked at all these companies in terms of if you had to say pick three to five things that people need to understand about these businesses?

• 5:02Speaker 04

  Yeah. So I mean, I would say the first one is that A, you know, it's become an incredibly popular thing. Um, so Bitcoin treasury companies has now accumulated about 725,000 Bitcoin. I think this number is outdated even from the week that we that we put it out. Um, I think we saw a few more. So DJT bought about two billion of, you know, MicroStrategy put out another press release this morning that they bought some more. At the time of writing, uh, about 725,000 Bitcoin, uh, which is equivalent to about 3.64% of the entire Bitcoin supply. Of course, you know, a big chunk of that is MicroStrategy, but this is on par with um, the ETFs now. So the Bitcoin treasury companies have now accumulated over half

• 5:45Speaker 04

  of the total amount of Bitcoin that the, uh, that the ETFs have, you know, accumulated all together, which is I think a pretty staggering statistic. Um, also in, in, you know, part of kind of our key findings was looking through what's the total market impact of these treasury vehicles? So 60 basis points of, uh, the kind of daily trading volume or price impact was attributed to these Bitcoin treasury companies on average, uh, in 2025. And on certain days, particularly when MicroStrategy bought or now Strategy, uh, bought that could reach all the way up to 9%, which obviously is very substantial. Um, but again, the daily average is about 60 bips, uh, which is, which is, you know, fairly, fairly material, but

• 6:29Speaker 04

  maybe not as high as some people would think. Um, I think, you know, maybe people have gotten this idea that These treasury companies are, you know, quarter or half of the daily trading volume. It's, it's actually on average been a bit lower than that. So there's one thing that surprised me. The total amount of debt that they have raised in aggregate is about nine and a half billion now, which is a pretty big number. And they've raised about 3.3 billion in preferred equity. And then, you know, we'll, we'll get into, I guess, the kind of individual structuring of, of some of these different companies. And, you know, how they, how they kind of differentiate themselves.

• 7:04Anthony Pompliano?

  Ben, why is it only 0.6%? That seems like such a low number compared to what people think it is.

• 7:09Speaker 05

  Yeah, it's a really low number. I mean, like, you've got to remember that this asset is trading at 50 billion a day, right? It's huge volume pumping through this thing. So even though we're talking about upshift, I think Will said 3.84% of the Bitcoin to float into these things. Actually, on a daily basis, it's not as much as you think. The other fact to remember is a lot of this stuff happens over the counter, right? I mean, if you take, for example, 21 capital, Bitfinex and Tether, they're attempting to just hand it over. A bunch of Bitcoins to get that treasury allocation started. It's not really all flowing through the market, but it can push up to 9%. We saw some days when strategies are really, really pushing through the markets, but they're impacting price significantly.

• 7:54Anthony Pompliano?

  But even 9% seems super low on like the highest days, right? You would think that on some of the highest days, it would be like 50%.

• 8:02Speaker 05

  Yeah, exactly. But to be honest with you, sometimes they're using different strategies like T-Waps or they're, they're averaging out. They don't want to have too much of an impact on price. I mean, even just for themselves, for getting a better price in terms of their entry. But yeah, you're right. It's, it's much lower than people think.

• 8:17Anthony Pompliano?

  Okay. And then, did you guys look at all, you know, Will mentioned debt. How do you look at the use of debt versus equity versus kind of like where the capital is coming to, to fund these purchases?

• 8:28Speaker 05

  Yeah, so it's really interesting. I mean, just studying this stuff, the way that they, and I say they in general, but really Saleh pioneered this, the way that they've secureitized Bitcoin has been incredible, right? They've kind of offered everything from high interest debt all the way through to convertible notes. The difference in somebody's structure is whether they actually have obligations in terms of their interest payments and dividends, right? So you might see a bunch of convertible notes which actually have 0% dividend or payment, but really the only risk down the line is dilution. But on the other flip side, you've got a ton of people who are raising loads of debt, 10, you know, maybe sometimes even up to 15% interest payments on those, and they might not be able to service it down the line without selling some Bitcoin.

• 9:13Speaker 05

  So what you end up having is like a really different risk profile on somebody's assets.

• 9:18Anthony Pompliano?

  And then I saw in the report that Strategies Bitcoin per share has grown 11x since they started. And so that's not 11%, it's 11x on an aggregate basis, which is like a 60-something percent compound annual growth rate since they started doing this, which is on top of Bitcoin's price appreciation.

• 9:39Speaker 05

  Yeah, this is, I think this is the coolest and maybe misunderstood, most misunderstood thing about about these digital asset trades. So you said Bitcoin per share, that's really two metrics that people need to care about. It's an NAF premium and a Bitcoin per share. So an NAF premium is essentially like, if you look at these things today, they're trading on average 78% above their Bitcoin holdings.

• 10:05Anthony Pompliano?

  Like a 1.8x, give or take, MNF premium.

• 10:09Speaker 05

  Exactly right. So you're paying like $180 for $100 worth of Bitcoin. And really, people are thinking, why on earth would I do that? Well, there's three reasons, and one of them is just Bitcoin per share. Very quickly, the other ones are just a demand dislocation in terms of getting compliant exposure to Bitcoin, and volatility, which is slightly complicated, but we can come to that later. This Bitcoin per share is the main driver, right? At the moment, if you were to buy passive spot ETF Bitcoin, it just sits there, does nothing, right? But if you want to buy something like Microstrat, they're using this to curtail data Bitcoin, this kind of like financial engineering to increase the amount of Bitcoin

• 10:50Speaker 05

  that they have, whilst either keeping shares the same amount of shares or slowly increasing the amount of shares at a lower rate than they are increasing Bitcoin per share. And really, exactly what you said, Pomp, right? So they've eleven X in the five years they've been going, sixty-three percent CAGR. That is what makes the premium acceptable, right? You can kind of frame it as an investor and say, I don't mind paying eighty percent above the current spot price of Bitcoin if they're going at sixty percent a year and I'm going to hold it for three years. Like, I'm going to be in the money in Bitcoin terms, not even just in US dollar terms, which is, which is really the interesting thing about these products.

• 11:32Anthony Pompliano?

  And so in a weird way, these Bitcoin treasury companies, I think people initially had pitched them as a way to get exposure to Bitcoin. Obviously, there's spot Bitcoin, there's ETFs, there's, you know, kind of a whole plethora of different ways people can get just plain, you know, kind of exposure. Really, what it sounds like you're saying is that these Bitcoin treasury companies are accumulation machines. They are figuring out how to accumulate more and more Bitcoin per share, which is ultimately the thing that the shareholders are benefiting from on top of just the directional movement of Bitcoin.

• 12:02Speaker 05

  Yeah, that's exactly right. I mean, I had, we've, obviously, it's not just Bitcoin now, right? The thing that's like the fastest institutional land grab in crypto ever. And it's not just Bitcoin anymore. It's ETH and Solana. I heard, I think, one of the founders of, one of the Solana ones, maybe DeFi Dev Corp or Solstax, he's saying, this is the equivalent of, rather than swimming down a stream, you're on like a speedboat down that stream. You just put an engine on the back, which is that financial engineering, right? And suddenly you're accumulating the underlying assets. I mean, way far as you would if you were just putting your paycheck in every, every month.

• 12:38Anthony Pompliano?

  Yeah, well, how do you feel about the Bitcoin treasury companies versus some of these altcoins? It feels like, of course, people are going to go do it. But is there anything different to evaluate with the altcoin ones versus Bitcoin, other than, you know, just Bitcoin versus the underlying coin? Like, are there other considerations?

• 12:54Speaker 04

  Yeah, I mean, there's, I guess, a few things, you know, one is just the, you know, if you go out and read, I don't know, even like nine figures for, you know, a coin that's maybe outside of the top five, top 10, then you're going to be a much, much higher portion of the volume than the like 60 bips on average that we're talking about all of these Bitcoin treasury companies are, because they're just much, much smaller assets than Bitcoins. So, you know, the benefit of that, of course, is that, you know, that for people that are looking for exposure to the underlying, that, you know, might be beneficial for the price action, but, you know, it might be a bit more constrained on the margin, you know, in terms of liquidity and, and, you know, execution, as well as, you know, in theory, if, if, if the market rolls over, going back the other way, the other component,

• 13:37Speaker 04

  which I think, you know, we can, we can get into for both the Bitcoin, as well as the broader, the broader treasury companies for the, for the other coins as well, the proof of stake coins, obviously, you know, are proof of stake, so you're able to, you know, generate yield on them. I think this is, this has been something that, you know, Tom Lee and Lubin have been really, really pushing on the, on the ETH front as kind of a narrative of, you're able to generate, you know, yield on, on the ETH that you have staked or whatever other proof of stake asset, and then you're able to kind of use that income to service any like interest payments, or if you have dividends on, on preferred shares that you've issued, whereas, you know, obviously with Bitcoin being proof of work, you don't have

• 14:20Speaker 04

  that. And this, this is a whole nother discussion about, you know, we, we, you know, we kind of break down a couple of the different, you know, structures of these things. So some of them, you know, you look like, look like a micro strategy, I guess we can, I guess we can just fully get into it. So like, you know, they have several different offerings, you know, they have STRK, which has 8% dividend, it's convertible to MSTR, and then also has a, you know, cumulative dividend, STRF has a 10% dividend, it's cumulative as well, but non-convertible, and then STRD, which is a 9% dividend, which is non-cumulative, almost like a junk debt. So they have like several different, you know, preferred share structures now. They have

• 15:03Speaker 04

  the common stock program where they're just issuing shares at the money as well as the convertible notes that they've issued. Then we also, you know, we have things like Metaplanet, where they're taking advantage of, you know, essentially, you know, putting on a, you know, short Japanese bonds, long Bitcoin trade by, you know, basically taking advantage of the fact that, you know, Japan is subsidizing their bond market via, you know, yield curve control. But, you know, for some of these other companies, you know, maybe we'll mention individual names, but there's some that are strictly saying, you know, hey, we're going to spin up an entity and then we're just going to issue, you know, common stock. And

• 15:45Speaker 04

  something like that is strictly reliant on this idea that you're going to have this perpetual premium to NAV that you're able to withstand. And, you know, if that kind of reflexive loop starts to lose momentum, then it could be problematic for those types of structures. But what we're now seeing, to tie it into your question about, you know, the Yallcoin structures and the thing I mentioned about like e-staking, now there's kind of this conversation around these things of can you acquire, use the Bitcoin on the balance sheet that you've taken on? And can you go out and acquire even, you know, even say, short-dated treasuries, right? And pull in some sort of yield or, you know, go out

• 16:28Speaker 04

  and purchase cash flowing businesses to then, you know, use that to service any debt or dividend payments that you have to make? I think for individual investors now, all of a sudden, you know, that adds a whole nother thing of, hey, now you have to underwrite the execution ability and, you know, the quality of, you know, the management as an investor, which is a whole perhaps different skillset in some circumstances perhaps than, you know, being able to structure a Bitcoin treasury company. So that's like something to consider. But now we're starting to see, you know, some conversations around, hey, you know, can we take the Bitcoin, collateralize it, and we have this maturing, you know, lending

• 17:12Speaker 04

  market around Bitcoin as, you know, institutions are coming in? Can we use that to acquire cash flowing assets? And this is, I think, a very interesting perhaps next phase for these things.

• 17:23Anthony Pompliano?

  Now Ben, when you take a look at some of the capital that's coming into this, did you guys have a chance to look at how much of that capital is hedged? Like, that's one of the things to me that feels like these equity investors who are pouring capital into these companies. Some of them want long exposure to the stock, some of them want exposure to the premium, but not necessarily to the movements of Bitcoin or kind of anything on that front. And so what did you kind of take away on that end?

• 17:49Speaker 05

  Yeah, so it's interesting. I mean, the first thing to state is that

• 17:54Speaker 05

  $8.2 billion worth of Jati's offering was through convertible debt, right? And I think it's gone up even just this morning before we started recording, but it was about $10 to $15 billion that's been raised across this base. So that's a huge portion, right? And a lot of what's going on there is convertible debt arbitrage, right? So Microsoft Jati has, I think it's even in a top 86 percentile for open interest in options. It's above Microsoft. It's absolutely huge in terms of options open interest. And what that opens up for these convertible debt arbitrage is the ability to pick out different parts of of the option profile that they want to be exposed to.

• 18:36Speaker 05

  Now, the convertible debt, we can break it down into a bond and then a call option essentially. What these arbitrage is doing is going short everything other than volatility. So they're hedging out Delta, they're hedging out duration, the works, and they're just going long vol. Because typically the convertible debt instruments, their volatility is much, price way lower than the actual real volatility. Suddenly when vol spikes up in the market, we're seeing a premium on these kind of debts shoot through the roof, which creates a bit of a flywheel effect, right? Because then Jati or whoever else can go and harvest that premium, increase their Bitcoin per share. And then suddenly their premium goes up even more because people think, great, I can,

• 19:20Speaker 05

  I can afford to pay more of a premium for future growth, right? So you get this kind of flywheel effect. To answer your question, it's not clear exactly how much of it is hedged, but I wouldn't mind betting that that 8.2 billion right there is hedged.

• 19:33Anthony Pompliano?

  Got it. And then Will, one of the things that I think most people who are looking at this are asking themselves, how much of the performance of the Bitcoin treasury companies is Bitcoin? How much of it is just like a macro enthusiasm? Because we have NASDAQ and S and P and everything kind of hitting all time highs. And then how much of it is people don't understand what's going on, right? And they're just kind of blindly buying things and it's all froth and a big bubble. How do you think about like the main drivers for these businesses? Is it something that's rooted more in Bitcoin? Or is it something that's rooted in this idea of enthusiasm in the stock market in general? And these businesses are kind of a big beneficiary with an Mnav premium that people then are harvesting to go buy more Bitcoin?

• 20:13Anthony Pompliano?

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• 23:54Speaker 04

  Yeah, sure. Pretty loaded question. I guess, you know, this might be a good segue into maybe just talk about, you know, the broader market as well. Yeah, I think, you know, Bitcoin has done well because we've had these tailwinds over the last two months that have, you know, kind of formed for a variety of reasons. And, you know, these treasury companies have been, you know, seen as a way for people to get, you know, cheap leverage or beta, you know, so, you know, getting kind of, you know, increased exposure to the underlying of Bitcoin, for sure. You know, there's a ton of, there's a variety of factors that we talked through in the report in terms of, you know, the capital structure, you know, something like

• 24:36Speaker 04

  MicroStrategy's got to the bear market. Anthony at our previously, you know, in research firm, we put out a report on MicroStrategy within a month of the bottom and said that they'd be okay. And I think back then, you know, a lot of people were saying they're going to go bankrupt and stuff. And so for anybody that, you know, understands the capital structure of MicroStrategy, you know, I think they're probably been more fortified than than some of the other guys. And then, you know, frankly, I would say another component is, you know, who can you, who can you put together that's, you know, kind of bringing this thing to market in terms of, you know, distribution as well, that that perhaps has has become a factor. But yeah, we can like use this to segue into into the broader market. So, you know, I guess to touch on kind of the the macro situation and, you know, the backdrop for the last couple of months.

• 25:21Speaker 04

  So we go back to, you know, pre-April, heading into April, you know, the Trump administration had been very vocal about basically saying, hey, you know, we want to try to get yields down. The way we're going to do that is potentially by, you know, triggering some economic weakness. We saw, you know, very, very sharp correction. And then they got exacerbated by kind of a, you know, shock around around the tariffs. But within a week, we saw the bond market seize up, you know, the move index, which is, you know, the volatility measure for for fixed income, blew out. And so, you know, that's, that's when you start to run into, you know, some issues, you know, in terms of, you know, now a lot of these systematic funds are basically

• 26:02Speaker 04

  just like short volatility. And so that caused a lot of, a lot of, you know, positioning online. But then, you know, very briefly after, you know, Trump said it wasn't the bond market, it seems like that, you know, probably isn't true, to be honest, did a basically a complete 180 from, you know, him and Beston talking about Hey, we're going to cut spending and do all these things to now it's hey, we're going to run everything as hot as possible. And so now we've gone from hey, we're gonna pull back on spending to we're just going to juice everything. And so now we're no longer cutting spending. Fiscal policy continues to be loose. The Fed obviously hasn't heightened rates.

• 26:44Speaker 04

  And there's also a decent likelihood that we may see Bessin rotate the allocation of bonds from the long end to the short end, kind of like Yellen did, even though that he gave Yellen a hard time, which is which is stimulative. And we're doing all this into credit spreads being low, the stock market's fine. So they're really exacerbating everything. And that's caused people to go out further on the risk curve. And that's exactly what we've seen. So, obviously, equities have done well. Bitcoin's done well. We've seen gold consolidating, but gold looks like it's kind of putting in a bit of a bull flag for people that are a bit more oriented towards TA.

• 27:28Speaker 04

  And then recently, we've seen a lot of the far tail crypto stuff pop off. This is just classic. We see Bitcoin run up. We've seen this rotation into ETH over the last week. Now we've started to see some of these further tail go crazy over the last couple of days. Obviously, this stuff can go on for longer than you feel like it can. But I would say, in terms of at least on the crypto specific side, at this point, with Bitcoin broken out to all time high, I played all time high breakout on Bitcoin. I was extremely probably the most long I had ever been on BTC pre all time high break, but I've taken some of that off. And one of the things that has me,

• 28:12Speaker 04

  obviously, I never short crypto, but as me a little bit hesitant to pile into the super far tail here, in like any prolonged period of time, just like running stops tight on anything that I do in my personal account, because if you look at Um, you know, one indicator I really like to look at for froth now is uh the all coin open interest dominance. So this basically looks at like the total amount of futures open interest on Bitcoin, ETH, and then alts as well. So like all the far tail, you know, risky assets. Um, whenever the percentage of total open interest uh for futures and crypto on alts flips that of Bitcoin. So basically, anything non BTC or ETH, that's been a very

• 28:54Speaker 04

  good um, you know, local, local, local top uh indicator on like a, you know, couple week basis. Um, I posted this last week and, you know, today, just a week later, it already is, is getting close to, close to crossing. I, I suspect that that's probably going to take place within the next week or so. So, you know, you gotta, you gotta play the music while, you know, gotta, gotta dance while the, while the music's playing. Um, but, you know, things are, things are definitely heating up. Um, I think like, people used to look at, you know, I used to look at like uh funding rates or like the futures basis as an indicator for froth. I just, I don't think these things are, are as good of indicators anymore because um, you just have like a lot more sophisticated market participants that are like arbitrage and funding. So they'll, you know, go long spots for the futures, you know, same on

• 29:39Speaker 04

  the, on the dated futures as well, especially on like CME, they'll go long spot, short, short future, capture the, capture the basis. So, you know, I like, I like this all coin open interest, uh, open interest dominance thing as, as a kind of, uh, you know, measure of, of froth in the market. Um, obviously, the, the treasury companies have been, have been adding to that, but I don't, you know, frankly, I don't think it's, it's, it's quite clear what exactly is going to cause them to, to unwind, you know, and, and to go back to the report, you know, specifically on these things, you know, we, we broke down probabilistically, you know, the ways that maybe some of these things can play out. Um, my personal take, I don't know if Ben disagrees with me, is that I think these things will likely become a victim of their own success. You know, when you have a certain amount of money that's

• 30:22Speaker 04

  coming into, into these assets, but you know, you have a huge influx of the total amount of supply. You just you just end up diluting the flows across the board and you know again it's hard to quantify like what exactly is that amount that that you know dilutes um and you know something like you know the converts might be tapping into a different type of market participant than you know just these at the money issuances for like you know the far tail all coin you know treasury vehicles for example um but you know I think I think that's that's that's a sign of for authenticating again I just I don't know it's it's tough to say like what what is the um you know what is the catalyst for these for these things to unwind um it's tough to say I I think from a from like

• 31:04Speaker 04

  a macro perspective that I guess the the last portion you know to tie it into what I was saying earlier about them juicing everything um you know I'm in the I'm in the camp that I think inflation probably picks up towards the back half of the year uh it's hard to say you know is that caused by by tariffs anything I know you you know you have a a stance on that specifically but I generally think that um you know inflation picks up towards towards the back half of the year just because we're juicing everything the wealth effect from from stocks you know uh you know household uh ownership of of stocks is you know at all time highs um even though it's concentrated and you know the more wealthy you know part of part of the you know the the population it's still at at all time highs so you know when stocks are going up there's more money you're coming into the system um and then you know people spend that back into the economy and we're

• 31:49Speaker 04

  juicing everything we you know with with asset prices near all time highs and and credit spreads being very low um and you know I think you've got you know both inflation swaps um so you know like like inflation protected securities as well as the yield the yield curve so you know the spread between you know shorter dated treasuries and longer dated treasuries is is starting to break out um after kind of consolidating uh you know for the last for the last you know month or two uh and so I think all these things are are pointing towards a a higher likelihood um of of inflation picking up so You know, from my, from my perspective, you know, again, like I said, I took some of the leverage off that I had really put on as Bitcoin started to break through all time highs, but obviously still

• 32:30Speaker 04

  have a core Bitcoin position. I like gold here and I don't like bonds. I think, I think bonds are in a, in quite a predicament heading into, you know, the back half of the year. Um, you know, we had this kind of window of, of, you know, weak data that I think brought, brought yields down, um, you know, in, in June, but, um, you know, we've gotten through that with, you know, P data and, you know, I think, I think we've kind of, you know, resolved people's concerns about the economy specifically for now. Um, I think, you know, the main, you know, we've also started to see, um, you know, PPI came in, came in soft last week, but when we include imports, you know, you see core goods is starting to pick up as well. Um, but I think the, the final hurdle for yields is, you know, we have FOMC coming up, but the day before that we have the QRA. Uh,

• 33:15Speaker 04

  and so this is when Scott Best, the head of, the head of the treasury is basically gonna, um, you know, kind of talk through what, how he's thinking about, um, you know, issuing, issuing US debt for the coming quarter or so. Uh, and so, you know, there's a chance that he kind of goes full Yellenomics and says, hey, we're going to issue everything at the short end of the curve, which I think is, is short-term, you know, um, um, you know, bad for, or, or good for, for, you know, yields, yields coming down, but over, over the long-term, you know, like, you know, we think of 20, 30 years, whatever. Um, you know, I think this is bad for longer-term inflation expectations because again, you're, you're just further, further juicing things. Um, so, you know, I think the, the bond, the bond piece is, is the tougher of the three because you, you know,

• 34:00Speaker 04

  you're kind of going against the government, which has these levers that can pull with, with that or the SLR exemption stuff. So, you know, lowering the collateral requirements for, uh, banks to be able to, you know, buy bonds. But, you know, overall, I think, you know, I definitely wouldn't want to be long bonds, uh, but I'm, I'm, I have a small, well, I don't want to say small, but I have this, you know, low, low double-digit percentage of my portfolio is, is short bonds with like kind of a, you know, three to six month time horizon. But if we get through the QRA, um, and we don't see best increase issuance to the shorter, the shorter end of the curve, I, I would expect that that, um, could, could start to pick up. So all I had to say, you know, I, uh, You're kind of agnostic to, you know, the, the, you know, far end of, of the risk curve for at

• 34:43Speaker 04

  least crypto stuff, you know, on like a couple of week basis, just because things are getting so frothy. But, you know, if I was going to close my eyes and, and had to, you know, put my positioning together for, for two months and couldn't do anything, it'd probably be long Bitcoin, gold and, and, and short bonds.

• 34:58Anthony Pompliano?

  Ben, anything that he said that you either disagree with or you think you should add?

• 35:01Speaker 05

  No, I think he definitely hit a point. Um, if we're looking on chain, which is mostly what I'm doing day to day, we're seeing most of that play out. I mean, if you just look at what NFTs were doing this morning, I think 10 million worth of crypto punks was wrapped. We've seen grayals like ringers, bedends, everything suddenly start to pick up over the last week or two. And that really does tie into what Will was saying in terms of the way that risk is, is kind of shifting from majors into alts and then maybe a little bit further out. Um, I mean, alt is an indicator flying up is just another way of expressing the, the, uh, alt ROI, um, and that's something I've been paying a lot of attention to.

• 35:42Anthony Pompliano?

  Got it. And then when you think, uh, Ben, in terms of, um, the Bitcoin, uh, market, one of the things that's interesting to me is Bitcoin dominance. I think it bottomed somewhere in like the low 30%. It shot back up, uh, over the last two or three years to over 60%. What is your expectation for, you know, where could it fall or grow to in, uh, in this bull market?

• 36:03Speaker 05

  Yeah, good question. I mean, I think the way that we're headed is going to start to come back down, especially if you look at the, um, HBTC chart and then even like Solis chart, right? These, those two look primed to, um, to pick back up significantly. Um, I think it probably comes down maybe even by the end of this year, early next year, in the low 40s, uh, kind of ranges where I'd expect to see it. I haven't paid too much attention to go off the last few days. And I imagine it shifted around a lot with that ease price action. Um, but those are kind of the, the two kind of areas I'm looking at.

• 36:38Anthony Pompliano?

  Got it. That makes sense. And then is there anything on the, uh, the interest rate side that either one of you guys thinks is interesting in terms of, there's obviously a lot of pressure on Jerome Powell and the Federal Reserve to cut rates. Um, he's done a pretty good job of resisting that pressure. Um, but you got to imagine in the second half of the year, there will be at least one rate cut, if not more. Um, how do you guys anticipate that playing into Bitcoin in particular?

• 37:00Speaker 04

  Yeah, I mean, I think, you know, to tie, to kind of think back and kind of like what we were just talking about. You know, I think when you, when you zoom out, you know, maybe this is a bit more esoteric, but I think the Federal Reserve is no longer likely to exist in the same way or fashion that it has. Uh, you know, maybe over like the last, I don't know, decade, two decades, several decades.

• 37:28Speaker 04

  Now, I think the Fed mandate will no longer be to manage inflation and price stability as much as it will be uh, to help manage the United States' debt situation. Um, and so, you know, I think some of this rhetoric coming out of, you know, Trump, uh, for example. If this is like borderline like emerging market stuff that we're talking about, right? Like firing the Fed chair so that the president can dictate what, you know, uh, interest rates are going to be. Um, you know, effectively, you know, Trump's, Trump's almost like trying to double forward guidance to Fed because he's saying, hey, I'm going to put my guy in in six months and he's going to cut rates. So forget what these guys are doing because the market's forward looking.

• 38:13Speaker 04

  So you're going to start pricing in what my guy is going to do in six months and override the forward guidance that the current Fed chair is, is providing. Uh, and of course, there's a whole, there's a whole Fed committee, but I think, I think going forward, these, the lines between, you know, the Treasury, the Fed will, will get blurred a bit because, you know, we kind of have to, right? We kind of need this like cohesive work together between these two entities to help massage things, to help, help service our, our debt situation. And I think part of that is ultimately, you know, we're trying to grow our way out of it, which is like the rhetoric that the Trump administration has, has pivoted towards. But we also, we need inflation to help service the, the debt burden.

• 38:54Speaker 04

  And so I would, I would suspect that, um, you know, slightly, slightly higher levels of inflation for the, for the coming decade, or at least, you know, five years or so may, may be the, maybe kind of the new norm.

• 39:05Anthony Pompliano?

  Got it. And then in terms of the report that you guys put together, where can people go find this thing?

• 39:11Speaker 04

  Sure. Yeah, it's on the Keyrock website under the the research tab. So, you know, Ben and the research team, you know, put together a ton of great stuff. I just happened to find this specific topic interesting. So I hopped in and helped out on it. He did a lot of the heavy lifting. So there's a ton of stuff on there, you know, no email walling. So, you know, if you if you enjoy this, your conversation, be sure to go check it out in more detail. Ton of graphs in there and visuals, things like that.

• 39:39Anthony Pompliano?

  It is. It's very dense in a positive way, Ben. So I don't know. I don't know if you like sat down one night late at night and just started banging it out or what. But I read it and it is, it's pretty incredible in terms of the level of detail. But I think also there's kind of the narrative. But all, you know, the data that you include is is pretty compelling as well. So you did a fantastic job of putting this together.

• 40:04Speaker 05

  Thank you. Got to hear it.

• 40:05Anthony Pompliano?

  Absolutely.

• 40:06Speaker 04

  A lot of caffeine.

• 40:08Anthony Pompliano?

  Huh?

• 40:09Speaker 04

  A lot of caffeine.

• 40:10Anthony Pompliano?

  Yeah, well, that's, I think that's what everyone would expect is a report like this doesn't get written without something stimulating your brain. All right, guys. Thank you so much for taking the time to do this. We'll do it again in the future.

• 40:22Speaker 04

  All right. Thank you, Anthony.

• 40:24Speaker 05

  Thanks, Paul.