00:00So James, Bitcoin ETFs are seeing record outflows. Strategy is pulling back. What do you make of that
00:05combo and how dangerous is that? Yeah, I mean, these are the two things that were the buyers
00:09over the preceding months from April through October, at least the biggest known buyers. But
00:14you've got to also realize when they were buying, if you look at the on-chain data, we saw a
00:18lot of
00:18what would people refer to whales, the real big holders, private holders of Bitcoin. You can see
00:22their wallets on-chain and they were selling. So obviously it's something to pay attention to. This
00:26month is pretty bad. We're actually at 4.3 billion with the outflows that we saw yesterday that
00:30weren't included in that report yet. So it's not looking good. But again, you've got to take a step
00:36back and look at what this is, right? At the peak through October, these things have taken about
00:40$63 billion. They took in $30 billion from last April through October. So they took in a ton of
00:46money. Yes, they're seeing outflows, but it's not like everything is running for the exits. It doesn't
00:50look good right now, but time will tell. You and Eric Valchunas and your team always make that point
00:55that, yes, we're seeing outflows to what you just said. But then overall, we're seeing still
00:58$100 billion in assets. I want to pivot now to strategy. I mean, strategy has been one of this,
01:04it's been the ballast in the crypto ecosystem as the thing that will never, ever, ever sell. And now
01:09they're saying that they're willing to sell. How do you read that? And what do you think changed
01:14strategy's investment case? Yeah, I mean, strategy went from doing nothing but a Bitcoin treasury
01:19company. They were selling shares of their company to own Bitcoin. They were selling convertible debt
01:23to this preferred share model. So they have something called STRC. They refer to it as stretch.
01:28That has completely upended things. They now have monthly dividends they need to meet. So it's
01:32made things more complicated. He's trying to basically create like some sort of capital curve
01:36or risk curve for Bitcoin. A lot of people were saying this was ultimately going to happen once
01:41Saylor went down this route. And it looks like that is what they're going to have to do.
01:45They have a long lead time. And obviously, their bet is that the reason they're doing this is
01:50Bitcoin is going to continually go up over the long term. But obviously, they're going to run
01:54into trouble in the near term. And that's what we've seen over the last few weeks.
01:57So then do you think that this is more disciplined treasury management or maybe a sign that maybe the
02:02old model doesn't work anymore? I mean, this is definitely disciplinary. This is more disciplined
02:08treasury management of what they were doing. Like when they signed up to be distributing these
02:11dividends, it's now at a 12% annual dividend on stretch. Specifically, they have a bunch of other
02:17things. They kind of change the calculus of how this thing works. He's trying out. This is the
02:21first time somebody's doing something like this. My view all along is I kind of view these premiums
02:25and discounts in a similar way to closed-end funds. So there are times where strategy or MSTR was
02:30trading at massive premiums. And like when you see that in the closed-end fund world where I'm more
02:34familiar covering, they're kind of similar to ETS but not as efficient. Those premiums never really
02:39last. So that's kind of how I was viewing things. And now it's trading more on par in most instances.
02:44So I'm not going to pretend to know exactly what's going to happen. Saylor has, like I said,
02:49some lead time to try and figure this out. He's built up a cash position, but it's definitely not
02:54done yet. And what the only thing that really can save strategy over the long term, say two,
02:57three years from now, is Bitcoin's price needs to go up.
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