you’re talking about a fed coin, you’re talking about a surveillance coin and you’re removing one of the best aspects of bitcoin in that the on-ramp would be outside of the banking system. Right bitcoin exists outside of the banking system and it’s so when you have a regulated stablecoin. You’re creating a regulated on-ramp to bitcoin and defeating the purpose of bitcoin the quality of bitcoin where it’s unconfiscated so this is really unique and just history. We’ve never had an opportunity to have wealth that’s UNC absolutely uncomplicated and that resonates that real people like that idea and the folks here who were unbanked right 70% of the country before bitcoin was unbanked now 70% of the country is relatively banked. As they all now have the Chivo wallet they have access to bitcoin. So, that was an incredible change, and people like that idea. People come up to me all the time in the street.
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They pick up their show me their phone and they go I have twenty dollars like I’m like that’s awesome dude. They know that nobody can take that this is theirs, it’s unconfiscatable. This is because they can’t be inflated away. It can’t be taken from the government, it can’t be stolen, it can’t be extorted and this is significant. The other thing is that it’s uncensorable. So, this is particularly key for remittances, so money going back and forth from El Salvador to the u.s this money can go and nobody can stop it – nobody can stop that transaction. It’s uncensorable, so those two key points I think get into it people. They’re what gets them over the hump. They’re like well that sounds good. Let me try it. Let me get started now on the wash sale trading rule. I would give that. I’m fairly ambivalent about that. It’s like that would be kind of nice. But I mean he’s trying to avoid this hyper trading that’s going on people trading without any cost whatsoever into kind of the fastest moving I’ll say coin, I don’t know. I mean altcoin.
There’s a tremendous amount of social media where you see hyping of a Meme coin. There’s no penalty for that mass of meme coiners out there to just jump into a new one there’s no tax penalty etc. So, bringing in a wash sale rule would theoretically put a buffer. All these traders they’re hyping on social media and they go very rapidly from one to the other. They’re playing this extraordinary game and so that’s theoretically what would kind of put a bumper on that activity, so I guess I guess it’s okay. But, you’re opening the door to regulation. So, that’s where I would say put a caution light there well again Michael is somewhat of a newbie it wasn’t too long ago when over there bit max. You can get 100x leverage so 20x leverage is moving toward a more sane environment than 100x again that kind of leverage is not consistent with the kind of guard rails that should be in place for the average retail in investor and so having access to that it’s almost guaranteed you’re going to get wrecked it really turns platforms like Coinbase and others that they become more like casinos. I’ve called them casinos before unlicensed casinos and so it has that element to it where you’re putting up a penny and you’re gambling on 100 on the 20x or 30x and as that type of trading is almost guaranteed a loser everything that’s not bitcoin as I’ve said on your show before would come under the heading of either relatively or absolutely centralized versus bitcoin which is uniquely decentralized. Additionally, a case can be made applying the Howie test then everything that’s not bitcoin would be an unregistered security right.
It also brings about the question about senator Lumus. In her bill that she’s trying to get through congress talks about applying some regulations to quote-unquote crypto. She does things like equate Ethereum and Bitcoin. She calls them both commodities which I think is false. I mean you can make a case that bitcoin is a commodity like gold. But, clearly, Ethereum is unregistered security and without any doubt. Whatsoever, so Gary Gensler over at the SEC kind of pushed back against all this and said: “Hey, lady, stay in your lane! You don’t know what you’re talking about”, which I think is the correct response when the cross-collateralization issue that he’s getting at is really a crisis Du Jour. I would say because of what we saw with Terra Luna and all these other d5 coins that they’re manufacturing that yield pump from kind of cross-collateralizing and putting money to work into other DeFy coins and these other default coins are generating returns by creating coins out of thin air. I mean by definition that’s a Ponzi scheme.
So, a lot of that defy return is just cross-collateralizing into new situations that are creating coins out of thin air and rewarding early coin rewards etc. again unregistered securities. So, you that’s definitely an issue you’ve got these what he called wildcat banks, these big platforms and they’re interrupting price discovery and they’re doing so in a way that’s manipulative and fraudulent. It’s the perfect opportunity for the SEC to step in and enforce the rules well. The adoption is definitely tied to understanding bitcoin and that the more you learn about bitcoin the more of a maximalist. Nobody who learns about bitcoin fails to become a maximalist; only people who really don’t take the time to learn about it are left in the camp of a no coiner or a skeptic. But, on this point, I think what he’s missing is the global nature of bitcoin. So, in the US which has the US dollar and it has a much different culture and the financial markets are in a much different place. This is a bigger problem to get through to people who are bombarded with so many things happening in the financial space and the way that that’s changing. I look at how for example gambling has become legalized with platforms now that we didn’t really have even a few years ago. But, if you look around the world places like El Salvador, the global south place in Africa. The need for bitcoin is so great that the learning curve is very fast. They just get it there’s a need for it. That’s where you’re going to see the growth pop bitcoin is really very much going to be the global south making a move on the global north you’re going to see the changing of the guard of the Central Banks that the Federal Reserve Bank and the bank of England European Central Bank are going to be usurped.
They’re going to be overtaken by this bitcoin revolution and it’s going to come from these other countries. It’s not going to be led by the United States, so I would suggest to Michael Saylor that he take his message overseas, take your yacht, and sail to countries where bitcoin is adopted. The learning curve is rapid because there’s a real need for it to throw America under the bus for now. Because they’re just mired in too much other stuff in these other countries. However, it’s where it’s happening faster because the need is clear and the asset is performing brilliantly for these millions of people and soon to be a billion people and more NASDAQ is for years guilty of wash trading amongst themselves to create the painting the tape and all these other techniques to create the illusion of volume and to manufacture prices. Bitcoin had this problem for years and so when the sentiment changed you would have an 80% drawdown because there’s just no volume there was no volume. Now, what’s different here is that over the past let’s call it the Michael Sailor Era of the past several years the volume has become legitimate. The demand is legitimate and so the markets are legitimate. But, the issue here would be the layering on top of this market of these derivatives or d phi and cross-collateralization always, of course, ask me and ask you and ask others for price predictions.
It’s an incredibly volatile asset, so it really is incredibly difficult to make a price direction other than just that prediction other than to say what I’ve been saying for 11 years. I can tell you the direction of bitcoin. It’s up if you hold it for three or f maybe three and a half years. Anyone who’s held it for three and a half years or four years is in the black right. So, if you’ve got a time frame of which is not a long time frame, three and a half four years. You’re going to be in the black. The central banks have finally decided within the last six months to raise rates and really put an end to a 40-year bull market in the bond market. So, on the macro side. This is the first time bitcoin has faced a rising interest rate environment which causes on the macro side a huge shift in the funds. You see, for example, something like the Russian ruble is the strongest performing currency in the world in 2022 because it’s a commodity-based currency starting in February with the Russia Ukraine conflict. We saw the end of a 40-year bull market in bonds and financialization at the beginning of a secular inflationary move in global markets. That’ll be tied to commodities which were not a big factor for 40 years. It was financialization interest rates extend and pretend just to create more bonds lower the coupon rate extend the maturity. That’s the way the world worked for 40 years and now we’re in a new world where suddenly the price of stuff like energy and food. It cannot be hidden anymore.
It’s actually hitting people’s bottom line and that’s not going to change anytime soon that’s a secular shift in the inflation in the economy in the globe. That’s going to be with us for years not a few months and so that’s something that is new for bitcoin ultimately. It’s going to do well in that environment because as people begin to understand that the financialized world is crumbling having us. I often say bitcoin is a risk-off investment. It’s not a risk on. It’s risk-off this is where you put your safe haven cash it’s hard to make that case with the volatility the way it is but when you have something for all the other reasons. It’s non confiscatable, unsensible, immutable. It makes a lot of sense for a billion or two billion. People out there that have been unbanked that’s where the growth is going to come that’s where the adoption is happening. So, those are the changes and some differences and some similarities. The fed is still thinking that the world is similar to the way it’s been for 40 years starting with Greenspan. You had the so-called Greenspan put every time markets came down. Greenspan would flood the market with more cash and lower interest rates and that there’s no problem that can’t be solved by money printing.
This article is a transcription of a video made by Jamie Tree
Original video: https://youtu.be/VxS9VmQPhOg
