Hi and welcome to Stefan. Lovera podcast a show about Bitcoin today for episode. 325 Plan. B rejoins me on the show. Now. For those of you don't know, Plan B is a pseudonymous Quant, who is famous for various models, mostly the s2f modeling approach. And so, we're talking about whether the s2f model.
Is actually still on track or whether it is not on track. Because there's been some discussion about it recently. And the publicized target, was this idea that if Bitcoin does not hit 100K by the end of 2020? One, the model would be invalidated and now Plan B and I get into that as well as spelling out the differences in the different models that he talks about and uses the failure conditions for the model and we also talked about his floor model and also his thoughts on the supercycle. Now this show is brought to you by
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And I thought it was time to get an update and hear from you how things are going. I know there's been a lot of confusion around the different models that's going on. And people having this whole conversation about whether everything's on track or whether it's dead. It's over, or is it maybe it's not on track anymore. Maybe you want to just clarify for people maybe for the new listeners. What's the difference between the different models that you've put out?
Yes, so the first model I published is stock to flow model. And I guess that's where people know me from, that's, that's, you know, Plan B is talk to flow, Etc. So so people are are are mentioning the stock to flow and and are connecting everything. I say to stock to floor, but in fact, I use 3 kinds of models and stock to flow, I and the stock to flow across asset model. That that came later.
Those are what I call fundamental models. They try to yeah, on a fundamental level, not on a price level or based on something else, but based on some fundamental thing scarcity, in this case, say something about the value of Bitcoin. So stop the flow is the center, the core of all my modeling. That's that's true. But there are other models. And for example, the well-known technical analysis models, which are
Ice driven, they are based on the Bitcoin price, only maybe, maybe some volume data, but I do use. That is so. So for example, an RSI and relative strength index would be a technical indicator or moving average. So the 200 week moving average is something that I use a lot on tweet a lot about and yeah, my favorite technical analysis thing is my floor model that got a lot of attention lately as well because
Quite nailed 33 of them, the last month's to the dot, but it's a bit of a bit in trouble right now. We're probably talk about that later. But that's a yeah, that's a floor model and and the Third Kind of models that I use is on chain models and and that's something you have very specific for Bitcoin because Bitcoin has the blockchain and all the transactions are in there. So everybody can. Yeah.
Analyze all the transactions that and all the blocks that come in every 10 minutes and see if it's big transactions or small transaction, alt wallet selling new wallet selling. And those kind of patterns are very, very interesting. It takes a big computer. It takes a lot of data analysis skills to do it, but it's very exciting. I must say, I spent most of my time, maybe 80% of my time in that in that, on chain data analysis are
Ria. So yeah, I I'm an investor. I like models. I use all those three kinds of models. So what stock fundamental model? Stop the flow, for example, the technical models and on Jane models and yeah, and I think that that's where a bit of the confusion comes from sometimes. But yeah, that's that's how it is.
I say, yeah, and so I think for people
To get confused. They think everything is to stop the flow where maybe that's not true. Right? So because you've got the different kinds of models and I guess in terms of what is public or out there. It's probably fair to say, you put the most out there about stock to flow modeling because that's probably what you're known for. That's your claim to fame. So to speak and your floor model obviously has been recently very popular amongst people out there, but I think the on change stuff that's maybe a little bit more of a private thing. You're doing even though
Arguably, as you just mentioned, that's 80% of your time.
Yeah, that's right. Oh, yeah, those are proprietary. The things you find in the unchanged. Stuff are so amazing. And so, useful for for investing and trading that I'm constantly in a dilemma. Should I put it all out there? Like, I did with the stock to flow? Or should I burst use it and see if it's working and maybe yeah, deployed in the market instead of publish it. So yeah, I'd
To publish later on some more about about the unchanged stuff. But for now, it's pretty proprietary in the D
indeed. Yeah, and in many cases, it's like, as you if these things were to be published up there. Well, then maybe everyone would use it and price it in at that point. And so I guess that's and obviously we've all had the converse of that that conversation about pricing in has been a big one in Years Gone, by maybe not as much nowadays. Also, I wanted to touch
ouch on one of your comments before we get into kind of, are we on track off track? You mentioned this idea that price discovery on the open market and it that it reminds you of a prisoner's dilemma. What were you getting at with that
comment?
Yeah, well it was the thought that, you know, in the prisoner's dilemma, the prisoners cannot talk to each other and then they have to make a decision if they make the if they both say the same thing they go out free both but if they if they say the different things they'll sit in jail and but you don't know what the other is going to say. So your your yeah sort of forced to say.
Not trust the other and if they would, they would both win and go out free and that's the same in the market. If the sellers would be able to communicate to each other and and, and, and decide not to sell for a not decide to sell at all, or if they must sell for a much higher price than the price would instantly go higher. So the, yeah, the fact that the very Act of selling
It is influencing the price. And, and, and the fact that you're punching in a low number because, you know, if you punch in it to a higher number than the trade, won't go through, and you won't sell it. So you punch in a low number, but if you would communicate with all the other sellers like, okay? Right now, we're not selling below, 200, k, for example, then the price would instantly go.
To that hundred K. But of course, yeah, sellers cannot communicate with each other. So they're sort of cord into the going rate and not not going too far from the, the, the current cell price. But, yeah, it's the fact that you can influence it that you, that you, if every theoretical situation that, if everybody, if every seller would decide, I will not sell below, 100 k, then the price would be
Be 100K instantly. Yeah, it was like that thought.
Yeah, of course and I guess at the end of the day that is a theoretical obviously because they'll be some people out there because, you know, some emergency has happened. They have to sell some etcetera. But as an idea and I mean arguably that could apply on the upside and on the downside and also I wonder the extent to which the existence of modeling out there that people are trying to, it's like a self-fulfilling prophecy that people think okay, 100K well,
That's quote-unquote fair value or that they're thinking of it in that way. Do you believe that any of your modeling is influencing the behavior of Market participants out
there?
No, no, not really. Not really by now. I'm a pretty large account, but not large enough to move markets. In fact, I could, I think I have more impact on the markets when markets were a bit smaller, like, 2 or 2 years ago or something. But no, I and I think it's much more fundamental than just an opinion or a model that someone that the market follows like that.
There is greed and fear in people. That's just human behavior and that will always be there. So it's very interesting to see that people like to buy Bitcoin and Bitcoin is going up. Although prices are of course a lot higher than when Bitcoin went down. But when big growth rate goes down and up. Nobody wants to buy Bitcoin. So yeah, there's also there's always greed and fear and, and you can model that.
Right, you can, you can model that. And, and also, there is momentum in the market, that that's one of the basic thing in. In all markets. Also Equity, markets, Bond, markets, Etc. That wants a trans starts. There is momentum in that it goes goes on and on. And that could be because there's a large buyer in the market that that cannot buy the exposure they want in one day or one.
Weak. So they need multiple weeks or months to build the exposure and and once yeah, one step that gets going and then it will continue. And so the momentum is a very real thing in markets, which of course, all the technical analysis is based for a lot of technical analysis is based on and then there are the really fundamental things over for stocks modeling, the cash flows. The dividend flows is a very real thing.
For for derivatives markets, for example, options, which is basically a volatility Market modeling volatility is is very real and very fundamental. It doesn't change.
Yeah, and I think the momentum is a really strong point. And I think I've mentioned this before I'm sure many others have that humans are naturally momentum chasing. So we see the thing going up and we all run in, everyone's running into by it and then we see it going down and then we're overly bearish.
So I think that is probably the most I think that that might just be one of the best arguments against the supercycle as it were happening this time. I but I'm curious, I'm sure. Listen, is a curious to get your thoughts. I think you are also anti. Well, not anti bazin. You think it's not the likely scenario. Do you want to explain? I guess, how, how are you thinking about this idea of the supercycle? This idea that it's not going to be like a big draw down or that, you know, it might the idea of 4-year Cycles might be gone.
Gone, how do you think about that idea?
yeah, I think you're very right that the greed and fear is something that
Maybe is the best argument against the supercycle because that will not go away and indeed. I think we will not have a, we will not have a super cycle, this so housing cycle. So next year, or until at 2024 before before neck solving because because of greed and fear because that will be fomo, once we hit the 100,000, maybe we will go down a little bit.
But once we really have crossed that hundred thousand lined and then I think the phone will set in and people will just buy Bitcoin and Bitcoin will go up to unimaginable levels. But but then people, some people will start to sell their sitting on a huge profit and they want to see some of that in dollars or they get scared or something happens, that that scares the whole, the whole lot and then and then we go south.
It again, and that will feed on each other on itself, the fear, and we will have momentum to the downside going to the next bottom. I think that's yeah, something in markets. That is so fundamental, that will not go away that having said that, most people that are proponents of the supercycle are technical people, or have some experience in investing, in tech companies, like Google and Amazon.
And what we've seen in those prices is that there is a lot of volatility in the beginning after the IPO, because there's a lot of uncertainty about company succeeding and adoption for the product kicking in, but once the adoption kicks in it goes, It goes up in an almost straight line with some volatility, but not the, the volatility you see after the IPO. So, so I think a lot of tech investors have that.
Until picture and they think Bitcoin will do the same thing. I don't think that is true because I don't think that coin is a company like Google and Amazon have thanked the volatility in Bitcoin which has been very high and still is very high. If you look at Option prices, the implied volatility is around 100 percent. So between 90 and 100 percent, which is huge. That's
You can't see that in any other market. So lot of risk / volatility in Bitcoin market, and that is also, of course, where the return is coming from. You cannot have a high return without the volatility. So I think it's something. So volatility is something that is not found in, in any other markets anymore in the, in the same way. It used to be. So, for example, Equity markets.
Seems to be going, they seem to be going up without any volatility, which is also logical because of an inch all the money printing. Same for a real estate prices up up up. But the volatility has to go somewhere. The risk, has to go somewhere and central banks. Cannot print the risk away. So we're seeing the risk sort of coming back in a concentrated way in Bitcoin. That's how I see it. And that's
That's why we have this this. Yeah, extremely high returns as well. If you can stomach this volatility. Yeah, you can reap the profits of the, what is it to 100 percent returns almost on average for Bitcoin annually. So yeah, I think the supercycle is very interesting concept, but it's yeah. The greeting fear stands in between. And what I do see by the
Is that once Bitcoin hits the stock and flow as scarcity, level of of the higher than anything else on the planet higher than real estate with the stock, the flow ratio of 100. Once we hit that and a Bitcoin becomes the most scarce asset in the on the planet. I think that could be the moment when hyper Bitcoin ization or the supercycle kick in.
In in, in a way that, yeah, it's so much better than real estate and gold and all the other assets that everybody will buy it. And and it will probably be the de facto money at that time. So we'll probably if you look at the for example, the stock to flow model at the moment. It uses Bitcoin prices expressed in dollars because the owner is the world's Reserve currency that everything is expressed in dollars.
Look, once Bitcoin hit that hit that, that that hundreds stock flow ratio of 100 and and becomes the best money. In fact, in the world. I guess it's time to price everything in Bitcoin. And the role of the dollar will will be less at that time. But that's after the next half inning and probably not before 2025 26 or something, but I could see.
See a hyperbola organization in that sense. A super cycle in that sense that Bitcoin becomes the de facto, a money and the denominator of all things valuable. I could see that. But later on.
Yeah, I say so you see it more like not this cycle but potentially next but then what about this idea that maybe 4-year Cycles are gone. And actually we might still have Cycles up and down, but just not for you. Once that, I guess now to spell out or flesh out that argument.
Might be that. Okay. The number of new coins coming in now is not that big of a deal and it's actually more about what the OG or older toddlers or longer time. Hot lers are doing with their stack. Then it is about the incoming new coins that are coming in as part of the block, subsidy every 10 minutes. What's your view on that?
Yeah, I don't agree with that view. I think that's a understand the view as in most technical. People are having that view. And, and indeed the, the amount of new Bitcoins or the percentage of new Bitcoins is getting less and less and less of a factor in the market. But I don't think that is the you have to look at it from the other way. And that's also in line was struck to flow view of things that you have to.
It like an investor, an investor has alternative Investments gold, real estate, equities, Etc, and Bitcoin. And the fact that one Bitcoin half, its the stock to flow ratio will double and it will put Bitcoin while next to next to a real estate by then and next Gold by now. So people are really comparing it to gold right now because it says scarce and as
well, that's that's how I view it. So, yeah, the fact that it only a cup. Yeah, very little new Bitcoins coming in the market and less, and less. By the way, every are having and that the impact for example, of exchanges selling their, their fees is bigger than that, or miners not even selling, but being fully funded through their shareholders and not not not having to sell their coins for free, electricity costs. Those are all
Yeah, maybe bigger factors in the market, but I look at it from the other way. So from the investor way at, they're just scouting for scarce assets. And right now, Bitcoin is comparable to gold and it will be comparable to real estate. And that will, that will be a big change in the eye of the investor
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Teen and 2020 was sort of like a bear ish years and then obviously this year 2021 has been a huge, big bull run and I guess the end of 2020 was a big. Well, there's a big bull run as well. So if we were to see like I you essentially arguing then that we could see a similar thing happen, that we may see a huge, huge momentum come in. And then again the cycle turns at some point and we have potentially a multi-year bear again, before the next full.
Yes, and I don't know if it's multi multiple year. It could all the Bulls and bear markets are different. Always there. Never exactly the same. But yeah, I think we go up for the Bull Run isn't finished yet. And I will go beyond the 100K level to arse. I mean, 200 300, you know and in last bull markets, the
The, the Bitcoin price went up 2x or 3x or sometimes even more above the stock to flow levels. So, yeah, we could we could see 300K Bitcoin that that would not surprise me. But after after the next all-time high, we will fear will kick in, and we will see lower bitcoin price and I guess that will lead to there will be a trigger that triggers that fear and that
Downward movement and that could be a government thing. It's mostly a government thing that could me could be anything. But yeah, I did. I wouldn't be super but it could also be just a very short bear Market this time only half a year or one year. It doesn't have to be multiple year. But yeah, it could be it could be that 2022 is a bull year 2020. I'm sorry. 20:22 is a bull year. Some next year another.
Inaudible run 2023 is a bear Market 2024, as will stay in the bear, Mark and then 2025 will go up again that I wouldn't see, press, be surprised to see that happening like that.
I say, yeah, and so the way I'm I'm seeing it or think about it. Is that as we're saying this whole momentum, chasing idea, that on the way up, there's all these people who are chasing the, you know, the saying the number go up and I haven't really studied this thing. And then, eventually as it turned, we fall to the level of the
The quote-unquote DCA army or the Bitcoin savings plan that sort of is the level who are holding the support. So I guess maybe that's where the maybe the supercycle. People are saying essentially that there's going to be such a phase shift or such a step change in the way people think about Bitcoin that they will just be all these new people who are accumulating Bitcoin and therefore that's why this kind of idea that the supercycle is going to happen. And therefore, it won't be a huge, huge draw Downs coming because it'll just be steady.
Continual adoption. So I'm wondering your reaction on that.
Yeah. I hope that were true. But that's how it felt lost. Last two bull markets as well like this time. It's different and we won't go down anymore. And and that's why you have to pretend I think you have to protect yourself against that feeling because I know how that feels. You think. It will go to a million straight up. But yeah, but I like the euro.
You meant, it's the DCA army or the the hot nurse, the army of Hitler's, that's constantly adding and not selling you could, for example, CD two hundred week moving average. That's a four-year moving average, that go, that's an indicator, technical indicator, that that sort of, yeah, measures the average price of the last four years. And, and that that measure goes up.
It always goes up. It never goes down and a Bitcoin monthly closes, never fall below that 200 week, moving average line. So it's very interesting indicator. And and I guess that's indeed the that's how I long term would see Bitcoin. It always goes up and and there are some a lot of volatility above that 200 week moving average which you should ignore. And and any go.
Up in the long term, it all goes up. But it already did that, right? Last last 10 years and I think next 10 years. Yeah, could be like that not necessarily in an acceleration of that 200 week moving average, so which would be the case in the if there were a super
cycle. So I wanted to turn now to the question of evaluation of these models because I think there's a lot of back and forth.
If people are saying, there's some people out there who are saying, no is s2f modeling is dead. And there are others who say, no, it's still on track. How do you think about that? How do you think the model should be assessed? And I remember one of our earlier conversations you were saying put in short terms is simple terms. If Bitcoin is not over 100k by the end of this year 2021 that you would then say. Okay, that model is probably failed. You do you still hold that view or has your view shifted here?
Yeah, that's a bit of a short.
Measure a bit of a simple measure. But yeah, I still hold that view. I think stock to flow is tracking very well since it was published in March 2019, when Bitcoin was below 4,000. So, it's yeah, it tracked really well, and it mainly predicted that. The halfing would trigger another was not priced in, and would trigger another bull run, which we saw. We're now sitting at
What bit below. 60, what is it 57, or something thousand. So if you look at the charts, for example, this but of bitch Dean which can be found on Twitter. It's the stock to flow multiple cult s2f multiple and it tracks the performance of the model on a daily basis. You can you can see that it tracks very well within most of the time within a one standard deviation band and
And it went a little below, the one standard deviation band, into the two standard deviations band lately, but, but came back up from there and we're now smack back in the in the one standard deviation band. So and going to war 200k. So yeah, I think it track well as advertised and I'm very yeah, even I
I'm a bit Amazed by that because the model should not work at all. In fact, write the efficient market hypothesis, but you cannot model the market but a, but I think the proof of the pudding, the real well Victory lap or are you call? That is, is when we cross that hundred K barrier. Guess that's the thing and I guess it's good to explain that the wet. When you read the article, when you see how the
All is made. It's just normal regression analysis. It's nothing spectacular. Nothing exotic. It's very, very simple. One, input variable. But what it basically says, it's after the 2020, having the price level should be on average for that that having period. So until 2024 shoot on average beat a hundred thousand dollars. So that is the real proof or
Datian, if you will, if we track if the data still fits that, very simple linear regression, then it's all okay, but since technical analysis, people somehow don't, don't really understand the average linear regression thing and are really used to think in levels and price targets. I shouldn't say dump that down, but
But I simplify that into. Yeah, well, if it should, if it should be 100K on average than well, one and a half year into the halfing Cycles or one and a half year after the last housing. It should at least cross that average of 100 cake, because otherwise, it would be very difficult to be 100K on average. We should spend a lot of time above, 100 k,
Even make that average. So yeah it at some point we should cross that line and I guess historically looking to last two bull runs 2017 and 2018 13 that point is well about one and a half years after the half weeks. So that's how I came up with end of 2021. It should be above 100 K, which is very short and snappy and and and technical analysis people.
To understand it. So so it's not so. So it's really the average that we should be looking at. But 200k is well short and, and
simple. I say, so just to summarize in the idea is let's say we're looking at the stock to flow model. The idea then is that the price of Bitcoin should be
We can sort of say oscillating around 100 K just as an example. And so the simplified version that you gave was that the price should at least cross 100K by the end of this year. And you said that I think last year and so you're also thinking of that as like a average over the cycle. So another I guess important thing to note is that Bitcoin can really move a lot in a short period of time. So it could very well spend, most of the Year. Well under 100 K and then just at the end.
Run really high. Or I guess the other aspect would be if the model, or let's say, if the price of Bitcoin goes, you know, well over 100 K next year, then it can spend also a lot of the time above 100 K. So I'm curious then. Are you? Is that how you're seeing it? I use just essentially seeing it. Like there could just be really big price moves towards the end of this year or start of next year.
Yeah. Well, if you go for the supercycle it could be
Like that, right, we could be below 100 K and then maybe a half next year go to a million and spent and and Beyond and then still hit that hundred K average, but I don't know if it's theoretically that could be but that's that's not what I expect. But yeah it so basically you can only say until next halfing, really what? But if the model is that, if they're under K average is reached but
Yeah, I think I think on average that should be and and there's another argument by the way against that we spend, for example, three years below under K, and the last year far above 100 K. Maybe maybe at a million or something. And that is the fact that if you look at a stock flow model and I and I find that very important it, then the Bitcoin price is above and below the model value each and every year. So,
Really oscillates like you call that around that, that that model line. It really stays close to the model line. And that's a very important thing. And you know, that was a whole cointegration discuss discussion when the model came out in 2019, which is very interesting and that sort of hit on that on that fact that the Bitcoin price stays very close to the model. And there were all sorts of formal test for the possible cointegration, which in the end.
We could not, we could not apply because dr. Flow is not a random variable. But, but it's a very, very important thing. Nevertheless that in my opinion, that the price of Bitcoin goes is below and above the model line, each and every year last 10 years.
Yeah, right. So in your point of view, that's not that should not be seen as like a coincidental thing or not, not relevant. Fact it for you in your
That's quite an important move point. Just. Yeah.
Yeah. Yeah, and it means that that we should not stay below 100 k, for example, next year and then shoot up to a million in 2023 and make that and still make that that average of 100 K. Because we should, yeah. What we should go above 100 this year. But at least we must. If we don't go above 100 K next year and then for sure the model.
Failed in my, I say.
And so, there's been a lot of talk around in a caga, right? Compound annual growth rate. And so the, that 200 number gets thrown around. And as we speak today, as an example of the 10-year version of that number. It's about a hundred and seventy percent. Although, of course. I know, I think it's only fair to say that that should taper down over time and it's not, maybe it's not fair to say, it's going to be two hundred percent every year going forward because it's just not
Sustain that I think it's probably more like like my friend has something in that 60 to 70% range. Is what we might realistically see for the next coming years and then it will taper down over time. And then eventually the model has to fail. As you know, I think you've mentioned as well. What's your thought on that idea? Like this idea that it has to tape it down and that eventually the model has fail would have to fail. Yeah. What and how would, you know?
Well, those are two points. So first
The indeed, it's the annual rate. If you look at the last 10 years of Bitcoin is a hundred seventy percent growth or profit and and that is high, of course. And it's a lot higher than than you would expect from the for example, Capital asset pricing model. That's a Nobel prize-winning model that despite all its critics is still used a lot in the financial markets where you can look at assets from a risk and return point of view. So given the
Got some asset, the volatility of some asset. There should be a return that that's what makes up for that risk, and the risk of Bitcoin is high. But the return is much higher. And you know, that I mentioned the risk, the volatility of Bitcoin is if you look at Option prices, implied volatility. It's about a hundred percent but the return is 170 percent. So the return is higher than the volatility and that is very rare to see in the market. So so all other assets but
Bonds, gold, equities, real estate, or other assets have returns that are lower than the volatility and or the drawdown, depending how you measure risk, but, and that's a very distinct thing from from from Bitcoins. It's technically, it means the Sharpe ratio is higher than 1. So the Sharpe ratio is the return /. The volatility, the bigger the risk, so it's 170 divided by 104 for
Um, and that is very distinct, and I don't know if that will fall. Actually, I think the current central bank policies and the weird stuff we're seeing with the money Printing and even negative interest rates in the part of the world where I live is yeah, putting financial markets upside down and making price Discovery almost impossible and, and you cannot kill risk. You can it seems like no company is allowed to go bus.
Defaults are are not allowed because the central bank will come in and save the bank or save the airliners or whatever. The and, and and the same, we're seeing right now with the whole covid, people are not allowed to die. And we're ya, doing everything to even the most stupid things to prevent it. But I think I'm getting at is that, that risk is not going away because because the government say, it's going away that risk, especially
Ninja Marcus, just go somewhere else and I have the feeling that Bitcoin is the New Frontier. The last place in the world. If you will were risk, and return can be truly present. And, and yeah, we're a true price Discovery can can take place. And that's a very fundamental thing, very, very yeah, new new way of looking. But so the whole question then boils down to
To risk is risk going to go away for Bitcoin because if that is the case, yeah. Well, then the returns will come down gradually from hundred seventy percent two hundred to maybe 60 which would be in line with other assets, but I don't know about that. That's not what I see at the moment. It could also be that the very distinct exponential Trends and the normal distribution of returns of Bitcoin very, very much.
Lowering power law, distributions, that that characteristic stays for Bitcoin.
I'm also curious to ask around Bitcoin and how it fares during a crash as an example. People might say during March 20, 20, every one was trying to go to USD cash, right? So that's where basically a lot of things all went down and obviously Bitcoin at that time. I think it was maybe nine or ten thousand a crash two, maybe three or four thousand something roughly like that.
At. And so the argument might be now again. I'm obviously more orange pills and Bitcoin huddling myself, but hypothetically people might argue look, people have US dollar-denominated debt or obligations. They need to make rent or payroll or various other obligations, and that's in USD. So that's why there's this big cell down. And so I guess that's the question that people might be thinking, is during a big crash during a big Financial.
Is could that also happen to bitcoin, or do you actually believe and maybe that's like the bull argument that people are eventually going to see more safety in SATs, then they do in the u.s. Dollar. What's your reflection? Or thought about that? I thought on that.
Yeah, that would be nice. But indeed 20 March 20, 22 covid crisis. Everything went down, right, the bull market or Equity markets, the and even Bitcoin one went down with. So
I have to sell everything because they lose their job, or the company is in bad, bad shape. They need money. And they need, they need the money in dollars or other Fiat and they need to sell their assets. So I guess. Yeah, that sort of stays on the other hand like you say personally, when I when I sell Bitcoin, then I have this gash on my bank balance sheet on my bank and yeah, it feels
Like more risky than having it in Bitcoin because yeah, the inflation is eating the purchasing power of my Euros away. The banks can can block the account freeze. The account can do everything with the account. It's yeah, it's much better feeling to have it in Bitcoin and going up all the time instead of having it in Fiat. So, so I'm personally selling only what I need for four.
For food and and stuff, but not more than that. So I yeah, I could see but but the the counter argument, of course, is that if you keep it in in Bitcoin, you should be okay. And at ease with all the volatility in fear terms of your stash, right? That's you should be okay to see it half in dollar terms.
Like we saw in May and June, when the Chinese ban was there, and if that's okay, then then because you know, that it on average, it will jump back again and average that will be this hundred seventy percent growth rate. Annually, then, this is the most perfect investment there is, so yeah. I'm also very hard core and that I'm okay with the volatility and, and keep it in Bitcoin rather than
Turning it to cash. But but in these very distinct crisis situations like March 20, 20, some people don't have a choice, they have to sell. And and and of course, Leverage is playing a part here as well. So one of the reasons that it was a big Sullivan Bitcoin, a very steep sell-off, by the way, in Bitcoin in March 2020 was because of all the leverage because of all the leverage Long's that were killed and liquidate it.
And those people have their stop losses, put and see the price. Go against them, go down and they don't want to sell because they hope they know it will go back up again, but the exchange will set it for them. They will be liquidated by The Exchange. And yeah, there's so much leverage in Bitcoin, which I think is very stupid for people to do to do naked, naked, Long's or shorts without
On the lying. So I think, yeah, that example that yeah,
definitely works coming back to what we were saying earlier around momentum and how people are thinking when they're in the Euphoria phase of the Bull Run. That's when a lot of people are, leave it up. And so that's typically when, you know, you can see these big big deleveraging moments where the price comes down a lot. And so at least historically, the way it sort of moves. It's almost like a two steps forward one step back.
Dance. And so it kind of comes up a bit and then back and then comes up again and back. And so, but eventually that dance is over and it's the end of the, it's the end of that kind of overarching cycle. And so at that time to use an example of 2017, the 20K was the top, right? But what happened is after that, drop down to say, 14k or whatever people were still wondering. Well, hang on, are we going to do another two steps up? Or is that it for this round? And it took some time for them to know? Oh, yeah. Actually we are done for this time and
Going to have to wait until the next big overall cycle, but in the minds of people out there, they might still be confused because you're not clear. Whether that was the top or whether we're still about to go back up again.
Yeah, it's always interesting to go back in time and look how you felt in March 20, 20. Did you were you close to selling or they? Didn't you feel anything? We're trying to stack hard switch off the Monitor and go sailing or running. Yeah.
By the way, why I say when the price goes down, I just switch off the monitors. I do a tweet like I'm sailing or I'm running because that's, that's really what I'm doing. Then, I'm just go as switch off the monitors and go away from the, from the desk and into nature, to not have to look at the. Yeah, because you might, you might be overcome by fear and sell and you have to protect yourself against that if you have the confidence and opportunity of
To set it
out. And so this whole conversation around macro and Bitcoin and broader conversations around nation states and their adoption of Bitcoin or their response to bitcoin. I'm curious around your thoughts there. Do you see this? Like there will be nation state level mining or do you think it makes more sense for them to Simply accumulate without Mining and either purchase or even print a
Purchase. What kind of adoption? Do you see making sense for nation-states?
Yeah, I think they'll have the same decision to make that all of us have made individually earlier on and that investors have to do and and institutional investors have to do right now to be to buy Bitcoin. Now would mean you're one of the first people or countries to do it like El Salvador that and they get older, the, the flak for it and also all the compliments, but from the traditional world and and IMF, for example, they get the flag.
So yeah, it's a first mover Advantage, but it's also a first mover who gets all the critics. So yeah, you have to have bowls. You have to have probably have to have a small company country with a leader that can that can do such a change that you pick changed and and but I guess it makes a lot of sense, right? It makes a lot of sense because the alternative is to be rescued by the IMF.
F continuously an eternally for smaller companies. But also, yeah, for the bigger companies, the central bank's play such a large role. At the moment. They save all the banks in 2008. They saved all the companies after a covid, March 20, 20. It seems that, that even the very big countries like us and all the countries in Europe, cannot operate, without the money printing of the central bank's. Oh, yeah. It's
That or or hatch a little bit into hard assets like like Bitcoin or gold or? Well, I find it very interesting, what the Chinese are doing at the moment. So they're buying they, of course, have a lot of the US Dept, the, a lot of the US. Treasuries, and if something were to happen with the US dollar in hyperinflation or depth rescheduling, then, of course, the Chinese treasuries would be hit and what you
you see, is that the Chinese are buying a lot of stuff in real stuff, right? Gold mines in Africa, Cobalt mines, all the commodity mines in Africa. All the Strategic important infrastructure like Harbors in the Middle East and Europe and even in the u.s. So it's very interesting to see the, the Chinese government by real stuff, hard assets. And of course, the
Just yesterday. My view would be Bitcoin because it's better than goal scarcity and goal in a few years and and more portable. More divisible. It's thermodynamically, the best thing there is and some governments will figure that out, like El Salvador, which is, of course, more country, but I guess that will that will see some some, some other countries following that up and then it becomes easier and easier for other countries to adopt because they're not the first move.
For any more. But I'm quite sure some countries are in that are analyzing it now and are making plans to do add to add Bitcoin, to the reserves or switch to legal tender, which, I'll solve it or did, which is variable smooth. But yeah. It, I think it brings great, great wealth to to a country. And but it is high
rating of El Salvador. So they have made Bitcoin legal.
And I'm sure you've seen the recent announcement about Bitcoin City and the use of a specially structured bond. That will actually be giving out Bitcoin dividend. So I'm curious if you had a chance to look at that Bitcoin City ID and Bitcoin bonds, and whether you have any reactions to it or any analysis, you've looked at.
Yeah, I didn't look at a city Bond as much but I did. Look at
At the volcano Bond, maybe that's the same thing. But the mining. I think they are one and the same. Okay. Okay. So yeah, I need the mining. Bonds are very interesting. And it's, of course, mining is a very profitable thing and, and giving notes or Bonds on that operation is a very, yeah, a very logical thing to do with block stream, of course, doing that already with the notes, the Block C mining notes where you can participate in an
Wise, very Capital intensive, very, very large capital investment. You can now buy small parts of that of that investment and still earn earn, that quite huge returns. So it has I think it's a very logical. Very nice thing to do. Any method of making it accessible to traditional investors because bonds and notes. Are they have ice in numbers? They are they can be put in the investment.
Consistent systems just like a normal Bond or shares and it's yeah, it's a very, very smart thing to do. I think we'll see a lot more of
that. Yeah. To your point about easy coding and putting into the system. It's crazy. How much inertia there is I recall at the announcement president mcculloh and Samson Mal block stream. Were saying it would be the code would be e, BB 1, right? And that was the El Salvador, Bitcoin Bond one, and that
That be the first of a range of these to come. So it might just be that it makes it accessible to people who are otherwise stuck in investing in the more traditional world and potentially even for the retail investors. There might be a reason for them if they are getting permanent residency in El Salvador with the track to citizenship, but I guess that is the question for some people because for many people might just be like, well I could just be holding Bitcoin. Why do?
I want to hold this and so I guess they would have to think about why they would want to do that. And in some cases it might be access in some cases. It might be, they want the permanent residency. It might be, they want to retain some exposure to bitcoin as opposed to buying property, or they might want some level of Bitcoin exposure. So I guess those are some ideas that I'm thinking of. Do you have any anything to add there or do you agree? Just
a great? No, I agree. And and of course the the bombs
And the mining notes that those have very different risk profiles some Bitcoin. They don't drop 50 percent in a week. For example, like Bitcoin. So the return would be a little bit less but the risk is much less than b going. And but still and especially for traditional investors that that are bit scared of the volatility of Bitcoin which, which is logical. I mean, hundred percent volatility is just too much for for all banks and insurance.
It's companies. But yeah, so the the risk risk return profile is is different than Bitcoin. So it makes a nice, very nice addition to to bitcoin the asset.
I say yes, in my mind. I'm sort of thinking of that tension or The Clash because I'm sure some listeners like screw that. Why you buy it. Why talking about mining Bitcoin mining stocks of Bitcoin mining notes and Bitcoin bonds, like just hold Bitcoin, but then on the other hand, it's the right tool for the job or for the right person, right?
Of course, the retail highly convicted stacker and hot law is thinking, no. I just want to hold SATs. I just want to hold Bitcoin but then maybe some of the institutional investors or other people who are thinking well, you know, as an example, they might be buying microstrategy because they want Bitcoin exposure and it's easy for them or they might be buying grayscale or they might be doing the gbtc thing or they might be looking at ways to get exposure by holding the mining stocks or by holding the Mining Node or in this case the Bitcoin Bond because
If they're not at the level yet of being able to sustain or take that volatility of just simply holding Bitcoin. So I guess that's maybe an exploration for the different kinds of people in the different kinds of reasons that people would ya by these different things.
Yeah, and and of course, we have fallen in love with Bitcoin, and Bitcoin is so much more than an asset. It's a way of living. It's a culture. It's a yeah, we are Revolution and a new geopolitical thing.
It's much more to it. But an investor, of course, traditionally investor. He's very in. Yeah, and a big institution. I said, he doesn't mind what what he's investing as he looks at all. The Investments that the same through the same scope and that, that is risk-return. So if it's better and risk-return terms and within his mandate, which Bitcoin is not at the moment, but then then it's okay. If it's better, they go there. If it's, yeah, they are.
Are added to the portfolio and but they will never fall in love with Bitcoin. Like we do
ya say and I guess it's similar. Kind of idea is other vehicles of investing. So there might be other people who are more comfortable with the likes of an ATF. So of course, while that might not be appropriate for those individuals who want direct exposure. I'm curious your thoughts there, do the ETS represent some kind of centralization risk.
To bitcoin. If let's say all the coins end up in the hands of one big ATF custodian or are you looking at it? Maybe maybe another way to look at it is it's just inevitable. It was coming anyway, and so it's time to like it will just exist. Alongside the let's call it the more open peer-to-peer Bitcoin world.
Yeah, it's less peer-to-peer, but I don't see the concentration risk as a big problem or I see it as a big opportunity. A logical thing.
You know, a lot of people, especially through, Pension funds, and normal investment schemes cannot buy Bitcoin because the asset manager cannot hold the bit going. There are systems are not adapted to private keys and or don't have links to custodian services. So but they can they can of course buy Futures and in gold in everything and also in Bitcoin, so it's very easy way of acquiring some
Bitcoin exposure for traditional investors and and and that's no problem at all as also not. If it's just a future ETF. It's it just means that that there is a counterpart that takes the first ten twenty percent annually for as a reward for having to spot exposure and and going through the trouble of having the keys in the custodian and services, right? But the traditional investors and the
The future, ETFs are willing to give that 10%. 20% contango premium up and go for the other. Well 117 minutes. Finest and is 160 percent which is still a good deal and fits within their systems and legal Frameworks. Oh, no, I think it's just a normal. Yeah situation. I think should go
right. Yeah, so I guess just to summarize some of the other points. We are talking about earlier.
As we were saying around 100 K by the end of the year, so essentially with stock to flow model essentially the simple way was hitting 100 K before the end of the year, but the other way could just be sustaining a number. Well, above 100 k for, let's say the next two years, after the end of this year, something like that and then in terms of the floor model, I think you got. Was it two or three months in a row, pretty much on the number, but it might be a
Difficult as we record this. We are the 20th to the 25th of November and the price is about 57k. I believe, I can't recall off the top of my head. But I believe your stock, your floor model. Had it something like 98k, meaning we've got about 30k to go and that was it seven days or something 67
days. Yeah. I want to, we're still in play. I guess. It's pretty yeah, almost impossible to reach that goal. So I guess I will be first Miss after the
Those three hits which which does not impact the stock to flow model, but it is a signal for me, that something is going on because this hasn't happened in the last 10 years. The floor model is a technical model. Like I said, based on price of the last 10 years and this is just an extrapolation of that. And the fact that it didn't hit 98 is in my view. Yeah.
An outlier, a Black Swan event. I don't know. Why. By the way, I have no idea what a price went down last couple of weeks could be the mount gox. Thing could be just technical technical issues or the consolidation after a big rice. It could be anything, but I couldn't point exactly what it is, but it, it it my eyes. It's it's an outlier. So
In fact, I keep the 135k prediction that the floor model gave for December. I keep that I still keep that up and I expect this as a the head or the frail. Sorry of the 98. If if we fail to hit 98 in five days, probably will, but I see that as an outlier and probably a v-shaped recovery after that and then
If that does not happen, so if we also miss the December, yet on the floor, malloy's out of the window and I'm broken, but a model, I think that's a good point to make a model is not broken by the first Miss. So a model is never 100%, right? It can't because it would not be a model, is a simplification of reality. So there will be mrs. This is a Miss. It's a big mess, but it should be a one-off if it keeps missing. If it's
It's not continuing, its nailing, the other months track level track record. Sorry then, yeah, that then it's not, okay, but missing one month is not a problem for me. At least
I say and you know, it could be that in the next five days. We see a bit of a run up. So it's not as much of a mess. Who knows, right? So, I guess that's probably a good spot to finish up. Any closing, thoughts that you wanted to leave the listeners with Plan B,
know what I like.
I have got a lot of new followers lately. It's about 400,000 last month and the month before that. So it's really a large number of new followers. I would urge those followers to read my articles, the original old articles from 2019, 2020 2020 because a lot of the questions that I get are all answered in those in those papers, and and of course there's a lot of
Interviews that I did going into depth for all the questions that are asked currently and all the previous podcast and interviews are on my website, Plan, B T, c.com. The articles are there as well. So especially for the new followers, go to that website Plan B TC.com and you'll find and make sure you read the articles and listen to one or two of the
The interviews that would ya, that would certainly give a lot of insight.
Fantastic. Well, pleasure chatting with you, and thank you for joining me. Plan B.
Thank you, Stephen.
I hope you enjoy the show. Make sure you subscribe, using your pod, catcher application, search Stefan, lovera podcast, and the show notes are over Stefan. The Peridot calm. Thanks for listening and I'll see you in the citadel's.
