PlanB Demand For Bitcoin Will Skyrocket

Hi and welcome to the Stephan Livera podcast. The show about Bitcoin and Austrian economics. Today for episode two hundred and forty-three, Plan B re-joins me on the show. Now, Plan B is a regular guest on the show. In fact, his first two interviews were on my show, so those are episodes sixty-seven and, and eighty-six for those of you interested. And in this show, we talk a little bit about why we believe demand for Bitcoin will skyrocket, and we talk a little bit about his thoughts on how the stock to flow and stock to flow cross-asset models are going. This show brought to you by Swan Bitcoin. Bitcoin has emerged as a major player on the global stage. It's been significantly de-risked over the past year with major investors, institutions, and companies making big investments. A common way people get started is establishing their initial position with a one-time buy and then start dollar-cost averaging with automatic recurring buys. Swan Bitcoin was built to do just this. You can create a recurring purchase plan like a hundred dollars a week or twenty dollars a day, and you can also make one-time buys if you want. Swan- sports bank wires for larger amounts and aCH transfers for smaller one time buys. Swan is available in all states and territories of the US, now including New York. Swan is the best place to send your friends and family when they're ready to start buying Bitcoin. Send them to swanbitcoin dot com slash livera and Swan will drop ten dollars of free Bitcoin in their account when they become a member. Lend at HoddleHoddle is a global Bitcoin backed lending platform so you can lend or borrow anonymously on your own terms in a peer to peer peer fashion, HodlHodl uses a secure and transparent collateral storage system using multi-signature for each deal, so this is a way to grow your savings and earn returns on your investments. So for example, if you have stablecoins lying around such as USDT, you can create your offer and earn interest by lending on Lend at HodlHodl, or the other way around, if you have bitcoins and you need some liquidity, you can borrow stablecoins by putting up some bitcoin as collateral without selling that bitcoin, and you can keep on hodling. So with HodlHodl Hodl's Lend platform, you set your own terms and you put up offers depending on how long you wanna borrow or lend and interest rates. Go to lend. hodl. hodl. com. Knox is a Bitcoin custodian dedicated to ensuring comprehensive insurance coverage for client assets. Much of what passes as insurance today isn't purchased for the sake of protection, but for pure marketing reasons. Knox believes insurance should exist to make fund recovery possible, not sharing coverage between customers. Knox takes a unique approach when it comes to purchasing insurance for customer assets. Coverage is Set aside exclusively for every customer in a one to one capacity, all with a comprehensive policy covering a range of loss and theft events including internal collusion. If you are a Bitcoin company, RIA, fund, trust, or family office, make sure to contact Knox to discuss Bitcoin custody and insurance. Plan B, welcome back to the show.

Thanks, Stefan. Stefan, thanks for having me.

Yeah, so Plan B, it's been a little while since we spoke, and obviously, it's been a very exciting time in the Bitcoin space. So just for context for listeners, we are recording on the fourteenth of January, twenty twenty-one, and, you know, as I speak, the Bitcoin price is around, let me just check this, it's about thirty-six thousand, one hundred and eighty-eight dollars in USD terms. Plan B, can you just give us a Thoughts on, just kind of where we are in the recent run up and the kind of, the sentiment in the market.

We're actually at a place where, we joked we would be. We went up, we went up very fast from ten thousand straight to forty thousand, and then, we crashed, quote unquote, to thirty thousand. And we have joked about this a lot of times when we were sub ten thousand or, or even at, at, at twenty thousand, but, hey, here, here we are. And I, I must say It is, it, for me, es-especially this is, yeah, a fantastic place to be, 'cause the, the, the model and the research that I've done seems to be, yeah, getting validated as we speak. It's, it's, it's, it's a bit too early to call, of course, and we're not at the levels we are expecting, but, hey, it sure, it sure goes up, and it goes up at exactly the time that the model, predicts, that is right after the hal

levels. So, so yeah, very exciting time.

So, in terms of the models, so we've got two main ones to talk about and think about. So we have your, you know, the OG model, the S2F model, and we've also got the S2FX, the cross-asset model. So, in terms of performance against reality, how would you rate them, the two different ones?

Yeah, th-th-that is, and it's very well that you say that they're, two different models and, maybe to give the listeners some context, and especially course there's a lot of new people, getting into the space. The first stock to flow model was created in, in, in March, two thousand and nineteen, and it was a time series model. So it looked at the Bitcoin price and it looked at the stock to flow measure, which, which, which is a, a measure to quantify scarcity. And then there's a nice correlation between them and, well, you can extra, extrapolate that into the future, and then you get to a value that was then quite conservative. Conservatively, estimated at fifty-five thousand end of, two thousand, twenty-one, and is later adjusted with new data, and other coin correction, hundred thousand, US dollars at the end of, two thousand twenty-one. So that's the first model, the stock-- original OG stock flow model. then a year later, in April, twenty twenty, the stock flow X model, the cross asset model was made, and, and it was basically not a time series model anymore. So it, it was a model that also This is, the same stock to flow measure for scarcity and looks at market values, but then across different assets. So Bitcoin is one asset and I divided four phases, phase transitions and four phases within the, within Bitcoin, but then it also includes in the, in the model, so in the data and, and, and ultimately in the model parameters, the stock to flow and, and market value of other assets like gold, real estate, silver, diamonds, and, and that's what What makes it very, yeah, different from the stock to flow model originally, but also more robust, if you ask me. and, well, important thing is that the price, prediction for end of two thousand and twenty-one is also a bit higher, i-it's two hundred and eighty-eight thousand, dollars as an average price in that specific four-year period. Yeah, and to be honest, I, I like both models, they're both my babies, but if I had to choose, I would, I would choose For Stock to Flow X model, because, it's not a time series model, so it's more robust. It's always better to have time out of the equation because, we'll get, maybe into that later, but if you correlate two time series, there is a big risk of, them being and, and the correlation being spurious, and that risk is less if you, don't have time series. yeah. And the other big thing is that we can now interpolate instead of extrapolate. If you have a time-based model, model, it can be the number of transactions, can be the, the time itself, it can be the number of, bitcoins in existence. Then you, you have to, sort of, y-you don't know what, what the number of transactions in the future are, and to base a prediction on top of that is, is, well, a risky thing. It's, extrapolation, it's, based on data that you don't have in your, in your dataset. But with the stock to flow X model, we have gold being at Flow and real estate being at a higher stock to flow and higher value, so we can actually interpolate within the data that is used to fit the model, and that is a very, very strong, argument, for this stock to flow x model

Yeah. Okay. And so probably a good point also to discuss some of the critiques of the modeling. So, the thing is, it, the, it's kind of shifted over time, right? So there's been this-- and I guess we're kind of talking about both the different models, but with the S2F, one of the interesting, I guess, developments was this idea of co-integration, which then later it seems that part has now been shown that we can't apply the co-integration test. From your perspective, what does that mean? Does it essentially-- does It essentially just mean we don't have the confidence that would have been provided by co-integration, but you believe that the model might still provide some high level predictive power. Is that how you would summarize it, or how would you summarize it?

A, a bit differently. But by the way, I, I got a lot of critique on the models, which I also, invited, 'cause, I think the models are only getting better if, if they're, if they're open sourced and, and discussed. So, yeah, the, the, and, and, A very intelligent, dis-discussion, so I liked that really much. It al-It's important to, to know that it only applies to the first model, so the time series stock to flow original stock to flow model, and not to the stock to flow X model. And what it basically says, or what it basically does, it's a measure that protects you or, or, or gives you some certainty that it is not a spurious regression, not a spurious correlation, because there's always a risk that you find correlation that there is no causation or no relationship. ship at all, it's just a fake, fake correlation. That's always a risk, and let me be clear, that is still a risk. It could be the, the relation between stock to flow, scarcity and value could be spurious, although every day that seems less likely. But, it, it is important to make that, that point. Now, with co-integration, it's actually a test, and that test, if you apply it and it, it proves co-integration, then the, less likely, but not certain, but it's less likely that The relationship, the correlation is spurious, is false. So there's a lot of probability that it is a, a casual causal, relation and a, a correlation that you can use for, for making predictions. But the discussion was quite, quite interesting because, it, it was actually held with a Dutch guy, an Australian guy, a German guy, and, and me. There were four people working on the same, same data and the same, test. And first, we, we all did the same test and the test- That clearly showed co-integration, and, and co-integration means that the, the series, stick together very closely. The, the story about the drunk and the dog were, was made. The drunk goes on the street to walk his dog, the dog is on the leash, well, the, the drunk goes everywhere, the, the, the dog goes everywhere, but the distance between the drunk and the dog can never be larger than the leash, and that's what you measure, the, the, the leash. They always, they stick together, and actually that's what If you, if you look at the, Bitcoin price, it sticks to the model, it tracks the model really, really close. and actually if you, if you do the test, you also measure there is co-integration. But then, one of the guys, the German guy, said, "Well, but hey, one, one of the assumptions in the test is that both variables are stochastic and not deterministic, so they should be random and not predetermined." And of course, stock to flow is predetermined, so, so we couldn't apply the test. So although the test Configuration. Theoretically, we can't and practically, we, we can't use it, but it, it clearly shows the, the moving of the price around the model. The test also shows it, but we, we, we can't, we can't use it. So, yeah, that, that was the end of it, right there. you could say, okay, it's, we should use another test or develop another test, 'cause it, it clear-- it clearly sticks to the model, the price. But on the other hand

And say that, there is no co-integration and probably, relationship is spurious. So that was the end of that discussion. On the other hand, if there is no co-integration, it doesn't mean there is no correlation, and the co-integration only works on time series models, so the original stock to flow model. By the time that the discussion was at its peak, I introduced the, the other model, the stock to flow cross asset model, and there, of course, you see an even higher R squared and even higher- Their, correlation and, we cannot apply the, co-integration test, over there. Yeah, that, that was, that was a very interesting discussion at the time.

One other interesting critique that I have seen in terms of the, so now we're talking about the cross-asset model, the S2FX model, is this idea that when we, basically, the S2F multiples of different assets, like if there's a variance in, in one of those variables that goes into it, I think the, the argument is essentially that The S2F variable dominates that calculation, and then that's what is driving a high R squared. How would you, think about that kind of issue?

I think that's true, and, we actually did some tests in the, Stock to Flow X model, but also for the Stock to Flow model, so to include other, input variables next to Stock to Flow, for example, the number of transactions or the time or, other variables, and it clearly shows what you already said that whatever you- You input in, into the model, the stock to flow is the main and dominant, force driving, driving the ply- the price, and, that's the case with both models.

Yeah, I see. I guess that would just be a difficult thing if you were gonna try to run that on other assets, right? Because we can see that with Bitcoin, but it's not like, y-y- well, I mean, if you're gonna try to run those other, like, not the price calculation, but with other things on gold and property, that's kind of a To create, though, right?

You mean the stock-- Yeah, well, well, that's the different aspects. If, if you do it on, on, other coins, for example, you find no coin-- no correlation between stock to flow and, and price. You actually find co-integration and correlation betw-- the price of those altcoins and the price of, of Bitcoin, but not, not between their own stock to flow and the, and the price of those, those altcoins. If you look at, gold and, and silver and

With a, a large stock to flow, with a stock to flow larger than, say, two, there's really not much there. Silver, gold, diamonds, real estate, maybe art. Art is a two, three trillion, market, but I don't have the data for that. I, I would be very happy to analyze it if somebody has the data, but, but that's about it, I guess. And, for example, if you look at gold, gold over the same period that I, that we have the Bitcoin data, so since two thousand And the, and the market cap of gold, it, it sort of stays the same. It, it, it's very stable, and, I plotted it in, in some of the charts. It's-- the amount of movement in stock to flow of gold and the, the market price of gold is, i-if you plot it, it's within the, the, the small dots that I put in that, in that chart. So it, it, it's really stable. It's remarkable.

Yeah, and I, I think you've also been, tweeting out recently

Idea of lengthening cycles and diminishing returns. So why was that?

Yeah, that's one of the other models that's out there and, and actually it's, it's a model I looked before I had, Stock to Flow, it's, it's basically the time model that a lot of guys are using and that is, I think, for the first time used, or, or published by a guy named Trololo in two thousand and fourteen. And it, well, yeah, it, it has this nice curve and, and it fits the- Model, or the, the price of Bitcoin very well, but, it, it, it tends to be not that stable, so it, it tends to be, you, you have to adjust it every year to, to keep it fitted to the data. So the time model is, i-is there, but it's, it's also underestimating a little bit, and it doesn't, of course, give, give credence to the, to the, the step function that you see in the, in the Bitcoin price, and that occurs

It's the first crude indication, and we all know, we've all know, seen the, those charts, but it's, yeah, it, it, it doesn't give any weight to the, the halvings and, and the, the very clear timing of price rise that you can, you can see in the, in the, in the Bitcoin price that is around a year, one and a half year after the halvings. it's a nice model, but it's, it's not, it's, maybe a step, a starting point, but not It also underestimates a bit, a little bit, because if you look at this Dr. Flow X, model, you can clearly see that last period, last couple of years, the, Bitcoin price was a little bit underperforming to that model. So the, the phase, if you will, the, the last four years was lower than the model, predicted, and that might be due to COVID, the last part of that four-year period was kinda low. But if you, if you use only those, that data, that time series data to fit the- The curves, then it, it, it must be a little bit lower than, yeah, it, it must, must track that lower data in, in the last couple of months. So that, that's one. And the other thing, and, and that's actually the main reason why I said, okay, the lengthening cycles and lower cycles theory is dead. If you track the prices without the model, just, just look at the data, you, you compare it to, what happened after two thousand sixteen halving and what happened after two thousand, Of halving, you see that where the price now is right in the middle of those two historic price, tracks. And, the diminishing cycle theory, diminishing, return theory says it has to be lower. So it states that the next, peak will be later and lower than the, last, well, if, if you look at it right now, it's obviously not the case. It's, it's a bit early to call, I should say, but, we're- were smack in the middle of the last two, so yeah, doesn't look that way.

Right, yeah. And so I guess to clarify, that would mean that if, if the diminishing kind of idea is more like it would be at a, you know, the, the cycle top would be less as a multiple than last time.

Yes, and current price would be much lower than it is right now. I see,

yeah. Yeah, and then where if we compare something like, say, the stock to flow, and I, I don't know, so one of the Twitter bots by our friend Bitstein, he's got the S2F multiple, and it's got a really interesting chart where he's basically showing the actual price versus the model price. And right now, we're actually above the model price, so, you know, actual, you know, it's like thirty-three thousand, oh, sorry, thirty-six thousand, versus, the So I guess what's your view on that idea? Even though, you know, we don't have co-integration and that's not part of it anymore, it's just interesting, I guess, to, to a person looking at that chart that you think, okay, it's really interesting that it's kind of staying inside that range. Now, I guess one critique that someone might be thinking is, oh, well, hang on, these guys with their charting and their modeling, and they keep changing the day, and, you know, now it's four hundred and sixty-three days

and so on. Yeah, the, the four hundred and sixty-three days is, is, is a nice thing, I'll, I'll get to that, that later, but first of all, yeah, the, the fact that the model or the price tracks the model so well, it's, it's actually, it's magical to see, also for me. I mean, you- You, you make the model, you, you, you trust or you hope it will be right, but of course, the, the proof is in the pudding, and, and now we see it happening, so it's, it's, it, it's, it's really magical to see it, and I'm, I'm very happy about that, and, well, we have to see whether it goes to the, hundred K or two eight eight K or that we already have it, have had it, but, I'm, I'm quite optimistic

About the four hundred and sixty-three days. That's, that's actually an improvement that was suggested, by, by Preston. And, Preston and I, of course, discussed the models a lot and, And, a-and also that, that site, Digitalik, you mentioned the bot, the Twitter bot of Bitstein, which is, which is a beautiful, thing. And, Digitalik, has, has also real time charts on his, website. and, well, Preston said, okay, you have to ask him, himself, 'cause he, he can tell it much better than I. But he said, okay, we see, I see what you did there. You try, you tried to keep We need to have the stock to flow as an input, but, we also see from last two halvings that the effect, that the price effect kicked in later. So there is a time lag in, in, in price, going up after the halving, and we can model that if we just very, roughly, look at the last two halvings, we see that, the all-time high, after the two thousand and twelve halving was About thirteen months after the halving, and for the two thousand sixteen halving, that was about seventeen months after the halving. so on average, there's fifteen months from the halving to the all-time high, and if you, if you multiply that by the number of days, which is, in a month, which is then a thirty and a half, you get very close to that, four six three, number, and, and, and that's how you calculate Calculated and, and, and when you, yeah, when, when you, use that number, the fit will be even better than if you use only the stock to flow, variable, because you now have, have, Yeah, adjusted the, average the stock to flow, over those four hundred and sixty-three days. And, yeah, I think it's a very nice, addition and it tracks, even better.

Yeah, I certainly think it's really interesting that when you look at this chart, that it just kind of seems to stay within these blue bands, and so there are times where it goes outside the dark blue band, but it's still within the light blue band, and so on. It's just an interesting chart to look at, but I guess- At, at any point, I guess it depends how bullish you, what we are on Bitcoin. Obviously, all of us are, we're all bullish on Bitcoin. I wonder, is there, because we, we, we really don't know when any of these things break down, right? And when I say break down, I mean like break to the upside, right? Like it may just be that, you know, enough people around the world wake up to Bitcoin, start buying it, and then just completely destroy all the models and just, you know, just completely blast through. Right? And this would be more like a, as I was discussing, with Preston, the idea of the final cycle. So I wonder, I guess as you look at the landscape, what's your thoughts on that idea of, okay, you know, are we just gonna, people just gonna start front running the future cycles and just buy it all now? Are we going to a final cycle? Or the counter argument might be something like, well, see, it just-- there's just not that many people who are woken up to Bitcoin and putting in enough of their portfo Folio into buying Bitcoin, so it just can't reflect yet.

Yeah, well, that's a very interesting discussion. I think we will be having that exact discussion for the next twelve to eighteen months, at least. So, It, it touches on a, a lot of interesting aspects, this, this final cycle discussion. And let me, let me, mention a few. one is the efficient market hypothesis, which was also one of the critiques on my model, right? I think Nick Carter, wrote a nice piece about it. But, the efficient market, hypothesis says that, all the information that's publicly available should be reflected in the prices of assets. So, stock to flow is publicly- Available, the model is publicly available, it, it, it shouldn't be so easy to make money, as just to buy Bitcoin now, follow the model, and, and, and be rich. So, the model can't be. On the other hand, and, and then we come to this, to this front-run, argument. If now we see that the model does work, regardless of the efficient market hypothesis, it does work, and it goes to two eight eight, what happens then? Will, will people then- Front run the next cycle, 'cause for the next cycle, the model, predicts a price that's far above, one million, dollars per, per Bitcoin. So will investors then- Price that cycle in as well, and, and the efficient market hypothesis says they will, 'cause the information is out there, we've seen that it works, and if everybody thinks it works, it would be the rational thing to do. On the other hand, and, and I don't know if-- I had that same question when the price shot up after publishing the model in, two thousand and nineteen, but that, that turned out to be too early, 'cause the price went down afterwards. But we had that exam- exact same discussion back then. And just like back then, I think we will not have a final cycle now, and we will not see front-- we will see some front running or some FOMO, if you will, after two eight eight, so the price will probably go much higher, maybe to a half a million at the all time high. But, I think the other important aspect is risk, and, and that was my counter argument at the time against the efficient market hypothesis, a critique as well, and I wrote an article about that.

Yes, the model is out there, yes, all the information is out there, and, it shouldn't be as easy as it seems to be now to make money just buy Bitcoin and follow the model and be rich. On the other hand, there's risks in the-- there's perceived risks and real risks in the market. I did a poll on that, and the, the number one risk that people see is governments banning Bitcoin. And, we see a lot of that, of actions in that, in that direction. We see, the US Treasury, Minister announcing draconian, laws over Christmas, with a, a process that's, that's not very democratic. So they're really trying to, to, to kill it. and we see today Lagarde from the ECB, warning about, about, regulation that has to be made against Bitcoin, although regulation of course isn't a ban, it, it, it, it's-- well, it could be good or bad, but it is a big risk, and people see it as a big risk, and we have, governments have barely woken up to the, to the possibility that Bitcoin could be a one trillion let's, let alone a ten trillion dollar market. So when that happens They will move, and, and, that could be a good thing or a bad thing, but it-- there is a risk, and another risk is quantum computing. they could, break the, private public key, relationship. so all the e-experts say it's not possible and it's not possible for at least ten years, and, and, and, and there may be, adjustments to the software, et cetera, but still, it is a risk, and I think the- Those risks, whether true or not, will, will, surface again, especially after the FOMO phase, after we hit the stock-to-flow target models and, and maybe beyond, there will be risks and there will be black swan events that, that make those risks, look very real and we will go down again. So I truly think that that will happen. And, and also, that, that's another argument, The human, nature, greed and fear, it, it, it will stay the same. So, yeah, we, we probably have FOMO, we will have FOMO once we go up and go beyond hundred thousand, and, and we go too high because of, greed, and then some risk will, will, Surface and, and people will be so fearful, and, and they, they think they're, they estimate the risks too high and, and price will go down. So yeah, I, I think that, that will stay the same. That having said, and that's the, the third big topic this, this whole discussion will, will, touch, it's the topic of hyperbitcoinization, and that's, well, the, all bitcoiners know what it is, but it, it basically means that the bitcoin, goes to the moon, that it will become a unit of account, and that maybe the dollar dies, and bitcoin will be the thing that we all use to pay and, and to save, money, and Yeah, yeah, when that happens, that, that would be the final cycle, but it would be more of a final cycle for the dollar, in my opinion, than for Bitcoin. So it will be the moment that the dollar will end, or will, yeah, will end, to exist as the global currency. And I don't think that will be this phase, the phase five, if you will, but the phase after phase five, so when- Bitcoin, will reach a market cap of, well, somewhere in the neighborhood of real estate, let's say, a hundred trillion, US dollars, and I, I, I like that number for some reason.

Oh, yeah, I wonder why. but yeah, I, I think, it's, if we look at, so just looking at the OG model, the S2F model, it seems to me that, so the model, that model predicted price of a hundred K for this round, and I think, off the top of my head, I think it's something like three hundred thousand or so for the, for the next round in, let's call it twenty twenty-four and the twenty twenty-five cycle, and then I think the twenty twenty-eight halving and then Predicting something in the millions. I mean, really, if we were gonna talk about final cycle, I think to me it makes more sense that twenty twenty nine might be the final cycle, but, I mean, things can change, but I guess that's kind of-- that's, I guess, one way to look at it if you're just looking at the stock to flow model.

Yes, I think, yeah, that's true. so it will be the next cycle after two thousand twenty four, more in the two thousand, twenty six, two thousand twenty eight, area Hyperbitcoinization is, is a really, I don't know if it's, it's a good thing or bad thing to, to look at, but, it will be very interesting and the front running also. I don't know. I, I mean, for sure if, if, if we reach that hundred, even the hundred thousand level, people will think, "Whoa, okay, well, then it might go to a million, I better buy some." And, well, maybe it goes down, but I'll wait, I'll wait a couple of

Regular stacking, dollar cost averaging or auto stacking group of people out there because those people are in some sense holding up the floor because after every dip, these are the people running in and or either they are manually buying the dip or their automated buys are kicking in and that's kind of in some sense raising the price floor over time.

Yeah, yeah, true that. And, and well, the DCArs are a lot of retail, investors of course. Maybe that's not a very, not the biggest driver at the moment, but also if you look at- Well, the three big, big buyers at the moment, Grayscale, who buys every day more bitcoins than there are mined, and PayPal, same thing, Cash App. So those three buyers buy each alone every day more bitcoins than there are made, so they have to bid the prices from people that hold them. Well, as we've seen, most of the weekends have already been shaken out by the volatility, so the hands holding the Bitcoin right now are stronger as ever. I, I mean, if I look at my own coins, I'm not gonna sell, never, ever, yeah, up First, whether he wants to sell, but you don't get my coins, and they will be harder to get, and it's very funny, I can see that in the, on-chain data as well, the shortage, the fact that there's not much coins, and I don't mean, don't mean the, the balances on the exchanges that are frequently, tweeted about and looked at, I mean really the on-chain data. It, it shows a pattern that is very consistent with the stock flow model and the four-year cycle, and it shows a shortage that, that's scary actually So in my opinion.

Yeah, and if you look at, well, for example, my sponsor, Unchained Capital, they have some really interesting work, the hodl wave chart, yeah, which gives you a nice indicator of, if you will, waves of hodling and how long some people have been hodling their coins, right? So, because there's people out there who've been hodling for, you know, multiple cycles at this point. Yeah. And so these are people who, I mean, I, I guess it's, it's interesting, right? Because you make

And others that's buying more than the amount of new coins created each day or issued, if you will, by the miners each day. But then I guess the other part of it is old hodlers, because eventually at some price, they might say, "Okay, I want to take some out and buy a house or buy a car and so on, " because obviously, yes, Bitcoin is going up, but I need to live, I need to look after my family, I have living costs or whatever. And I guess maybe that will become a more of a dominating factor of just how many people are willing small portion at, you know, aggregated across millions and millions of hodlers, that small portion can add up to a new amount of supply hitting the market in terms of the sale of Bitcoin.

Yeah, I, I think that's a key thing you, you described there, and the HODL wave chart is, is one that is, that has inspired me, since the very beginning to do on-chain analysis and look at the data. The HODL waves are really-- If the listeners haven't, haven't, don't know what we were talking about, Google it,

Hollow waves is basis is really an intriguing, way of looking at Bitcoin. I make the hollow charts, myself. If you have, if you run a full node, you have all the data, so it's, it's really, if, if you can do a little bit of programming in Python, you can make them, yourselves. A-and you can go a lot deeper than that as well. So, for example, the UTXO, set, the total amount of, coins, in, in the transactions that are unspent

Yeah, a, a treasure of information about, about how, how those coins move, who is selling, and, and it's, it's really unique to Bitcoin as well, 'cause in bank data, you don't have that. You, you would have to have access to all the bank's databases, and with Bitcoin, you, you-- for the first time, you have that. So that's, like a haven for, for quants and a haven for, people that like to, to make new economic theories about how, how this works, this,

As well, who do similar kinds of things. I know CoinMetrics do some related analysis and also, Glassnode. So I ha- for listeners, I've got an episode with Rafael Schulzercraft, he's from Glassnode, he's the CTO, and we spoke a little bit about some of these statistics as well. And I guess one interesting one is looking at, of all the unspent transaction outputs, you can look at how many of them are sitting in a profit and how many of them are sitting in a loss position and try to ascertain where the market is at from

The, the macro world of all of this. what are some other, I guess, relevant factors to think about? I mean, every-- Well, it seems every six months we get some, drama about Tether and, oh my God, Tether isn't backed and so on. What's your thought on all of that?

About Tether, I, I, I don't think it's, it's, it's a, a relevant factor. it, it's a lot of foot-- It, it, it's really a lot of foot and, and it's

The tether, and it's at specific times, right? When the, when the price is sort of, wobbly and, and, and, there's a lot of, things going on, so, such as with the regulation at the moment, then all of a sudden you get like, I, I get daily about fifty DMs in my Twitter of people, "Oh, how about tether? How about tether?" They ha- they, they put their comments under each and every of my tweet, and my impression is that's, it's a, Army of futsters that, that try to spin a story, and of course it gets picked up by, by people without a brain. So it's, nah, it's, it's, it's nothing. I find the, there was a podcast, I don't know where it was, but with the, the two guys from Tether, who were, who were-- That was very good. It was re-- Last week, it was very good, and they explained how it works and, and, and why Tether is there, because, you know,

to the US or to Australia, it'd easily take three days where if I wanna park some Bitcoin money in cash in US dollars for a couple of hours, that then wouldn't be possible. So, yeah, you need a, a coin, a synthetic dollar where you can park and, and, and, and park your, your money that goes, way faster than the old slow traditional banking system. And I get it, and, yeah, that's, of course the how, how much the tethers are backed by real dollars and, and- And other assets, that's a, that's an important thing and, and more transparency can be given there by Tether, but it's a very traditional, issue as well, with, with having collateral against loans and future markets that are, fully collateralized every day. I guess for people who aren't aware or not familiar with those collateral, processes, that, that it sounds very opaque and mystique and is the stuff that you make, a lot of fud and, conspiracies about. But for me It's a non-issue.

Back to the show after a message for the sponsors of the show, ciphersafe dot io. They are producing the CipherWheel product. So if you've invested in a Bitcoin hardware wallet or you have a bip thirty nine seed, those twelve or twenty four words, make sure you've backed it up in a way that's fireproof, waterproof, rustproof, petproof, and tamper evident. Look into the CipherWheel. It comes in a wheel shape and it masks the words of your seed, and it also comes with a padlock tamper evident seal so you can know has been opened. Make sure you or your loved ones have access to your bitcoins if an accident occurs. There's a range of products available on the website at ciphersafe dot io and use the code livera for a discount. Are you looking for ways to get multi-signature in a guided approach? Unchained Capital are building Bitcoin native financial services and they can help you achieve this. Their multi-signature vaults are easy to use, they're a web interface, you can get two hardware wallets and set them up on your own, but if you need help, they offer a concierge service. Now This both in a personal context and also in a business context, so you can have concierge calls to walk you through configuring the devices, they'll send you the devices and they'll send you some Bitcoin to put in the vault also, and they'll educate you on each step in that process. Unchained offer a range of features such as advanced features for those of you using it for business accounts if you are moving to a corporate Bitcoin standard, so make sure you go and check them out. They're also a great option if you are looking for somewhere to store your keys in terms of Your self-directed Bitcoin retirement accounts. So go to unchaineddashcapital dot com to find out more. Back to the show. Yeah, sure. And I think it's, it's really interesting that a lot of people just-- I guess people just latch on to an explanation, and sometimes they can't find it in themselves to believe that Bitcoin is this genuinely new thing. It is a monetizing asset, it's not just like some little tulip bubble thing, and bubbles don't, you know, tulip bubbles don't last for 12 years and continually grow each year. time and have all this actual utility and networks growing around the people who really use it in the real world, right?

Yeah, and maybe, maybe Stephan, it, it is easy for us having, both having a background in, in banking and, and institutional investing, but, I mean, what I've been seeing since two thousand eight and two thousand nine, basically since, since Bitcoin was developed and since the global financial crisis, the, the amount of quantitative easing and the money being printed by central banks, what they have done last year is It's so overwhelming, so it's the only macroeconomic topic, it overarches everything. It's, it's staggering really how much money is, has been printed and what it has been used for. And I've been in a position where I've dealt with central banks on a daily basis from a, a bank context with, Basel capital management requirements, from, from a, an insurance context with solvency requirements, and we've been, we've been working, actually, we've been selling stuff to the central banks Banks for years and years and years, and, and they buy everything. It, you know that famous scene in the, The Big Short, where, the crew is at a conference in Las Vegas about, mortgages and, and mortgage securities. And com- there are also conferences like that in Europe, actually the same organizers. And the, at those conferences, everybody, the, the, the central banks are there as well, and everybody talks with and, and, and about the, the central banks, because they are the biggest buyer out there. They buy everything. Limited budget. I think if you're in the trenches and deal with the central banks and with the quantitative easing, no matter how you call it, can be a semantics game, it has been becoming a semantics game lately, but regardless of that, if you're in the trenches and doing this work, you see the, the absolute staggering obscenity of it, if you will. It really reminds me of, of Zimbabwe and, and Weimar Germany. It, it can't end well. Well, yeah, we'll, we'll have to see. And, but, but knowing the quantitative Freezing and how it works makes me a, it's very helpful in making me a big believer in Bitcoin. Yeah, I, I, I truly believe that.

Yeah. And in terms of, comparing this Bitcoin bull run versus other Bitcoin bull runs, and I know you've been charting them out and trying to show, okay, if you, if this, if this were sort of equivilized with a previous cycle, yes. what would it look like? And we're sort of tracking in the middle of the two other halving cycles. Yes.

Yeah, yeah. We had two earlier cycles, which isn't much, but we can, compare, so that was the two thousand and seventeen cycle and the two thousand and thirteen cycle, and they are quite different actually. Two thousand and thirteen was, was of course very early, and it was in a stage where mining was a big, big topic as well, 'cause that was the, the, the year also that ASIC chips, mining chips, so application specific integrated circuits, so very specific mining chips were introduced and, and made the- Security of the network, well, like a million times, bigger, and everybody who had that chips had an advantage. So there was huge optimism and, well, excitement about this step in, in, this next step in the Bitcoin history, and price shot up from, from, I think it was a low of two point, two and a half, dollars, average five dollars to first hundred dollars and then a thousand dollars within one year. So that was really, yeah, unimaginable. fast and, and without much, corrections in between as well. There was been one big, correction, but, but then two thousand and seventeen, the mining technol-technology was already, was done. There was not, well, there was a lot of improvement, but not like that big, huge jump like in two thousand and thirteen. So the, the new thing and the excitement was all about altcoins and ICOs and forks. Everybody was dreaming about tokenized world and, and new coins and- Sort of fintech wave hit, hit the markets and, and that craze shot the price up from, what was it, four hundred to two, two hundred in the, in at the low to, well, yeah, twenty thousand at, at the high. So that was also very, very nice rise, but it, it had several corrections in between, like six or seven, very different from, two thousand thirteen. So it had, it had six or seven corrections of about thirty percent in between, in, in that big rise. And, yeah, so, so right now the big question is correction or no correction? I guess part of the answer we, we already have, we-- because we just had a big correction when, price shot up from ten to forty thousand and then crashed to thirty thousand, which is twenty-five percent, minus twenty-five percent correction. But, but it's very, very, if you ask me, it's, it's very similar, maybe more similar to two thousand thirteen price-wise than two thousand Seventeen, so we might as well see not that much corrections, on our way up, and that is also compatible with the macro environment that we see at the moment. we talked about that, the quantitative easing has gone full throttle, of course, since, COVID, and more money has been made by central banks and will be made by central banks in the months to come than we have ever witnessed before. So that money has to go somewhere. I mean, that, that goes to banks That goes to companies that are saved and, and would have otherwise, defaulted, and all the people, all the managers, but also the employees of those companies, they can go on buying stuff, which is a good thing of course, but it, it also keeps the econ- economy going, and, and, in that way, in a very real sense, the quantitative easy-easing money, the printed money, enters the real economy, and it enters the real economy at, at the top first, of course, so the managers get it first, the politicians and And, the people that are already rich. So what, what did they do with it? They buy assets, they buy a second house, a third house, a street of houses as an investment object, they buy gold, they buy Bitcoin. Part of that, and, and you can quantify that as well in a model, but, but, yeah, part of that money will trickle down to, to assets and also to Bitcoin. So with the amount of money being printed, yeah, I, it's, it's almost unimaginable that, that we go down Down from here or have very big corrections, and quite honestly, you can see that in the prices too. I-if there's the last three months, two months, three months, if there was a si-significant dip in the price, it got scooped up immediately by buyers. And, and Michael Saylor is very eloquent in, in, and very open in how he did it, right? How he bought his first two hundred million and, the other four hundred million and, and, and, and the other buys since then, he does this very- Professionally, with a lot of help with, with, from, from, people that have the equipment and the access to the, to the market, and they, they sort of move that money without moving the price too much in very small, tranches. So yeah, I have the feeling that every dip, every time the, the price goes down, there's somebody with stronger hands that will, say, "Thank you very much for the coins, they will now, end up in my wallet," and they will Will go in deep cold storage and never to be seen again, or, or at least in the next ten years. So, yeah, I, I think we're witnessing that right now, and it feels more like two thousand thirteen and two thousand seventeen for me.

Yeah, very interesting there. and I guess as we are entering this whole phase five thinking, are there any other broader macro themes that you think are worth commenting on in terms of things like, you know, what other kinds of entities we might see entering? The space, what kind of, you know, vigor will they be entering the space with? Will they be sort of very cautiously dipping their toe in, or will they start to actually, really, you know, really dive in, you know, full, you know, dive in in a more deep way to Bitcoin?

Yeah, there are two things I'd like to say about that, and one is the, the investors are, the institutional investors are really lining up now to, to buy Bitcoin. I've been Invited almost weekly to join meetings with hedge funds, family offices, banks, insurance companies to talk about Bitcoin, to, not only the stock to flow model, but, just the whole Bitcoin thing and how, how you can buy it, and how you can hatch it, and how you can, can, can, can do it as an, how you, how you have to look at it as an, as an investor. So there's really a lot of demand from, from, from investors. And one other thing that, things that I, I find And very interesting also for myself is the, the, the derivatives markets. So if you look at the futures market, for example, you can now buy a Bitcoin for, say, what is it, thirty-five thousand, dollars, and you can sell it at the same time for a year later, you can future sell it for more, so for, I don't know what the price is, but thirty-six thousand. So you get a certain, one thousand dollars, profit, you only have to wait for a year. And of course You give up your upside and you also have no downside, so there's really less risk, but you, you really have to do, to know what you're doing. But anyway, if, if you do it like that, it's, it's a cash and carry strategy, you can make a twenty percent return, annualized, and that is, that is the kind of returns that, yeah, very, that, that, that, that, Warren Buffett and, and, and famous hedge funds, get, but, but not banks or insurance companies, they'll So twenty percent on, in an easy trade like that is something that, that cannot be ignored and is seen by more and more people. And some people, well, put their toes in the water, and of course it works. So more and people, it is too good to be true. And, and add to that a negative interest, rate environment that, that I'm living in, in Europe, minus, point six percent, you can actually buy as is, you can, you can, you can borrow money for, for, for negative interest Interest rates, if you're an institutional investor, but even as a, as a private individual, you can lend against your house for one percent or, lend without collateral for three percent. Well, if you use that money, I, I, I'm not advising to do that. I'm, I'm advising not to do that. But for, for professional investors, this is, this is candy that's, that's, this is, this is too good to be true. And then if we go, if we look at option markets, we see implied volatility Of over a hundred percent, which, which means there's call premiums from, well, forty, fifty percent. W- so you can, you can do, volatility harvesting, strategies and which are very, very profitable and, and cannot be done on other asset markets. So the whole, derivatives markets and the relation between the spot markets, derivatives markets, futures, options, et cetera, I, I'll be watching them like a hawk, actually, participating in them. I see a lot A lot of people entering those trades and looking at it, I think the prices, the future and option market prices will give us a lot of information about, about the future. So it's, it's really interesting if those base rates in the future stay that high, if the implied vol in the option markets stay that high, and, yeah, so that, that's, that's one thing that, that can't be denied anymore by- That's more traditional investors, and that will be seen by more and more. The other thing, it's not so much investing, but more, yeah, society thing, and, and, yeah, I guess it's a very positive thing. Good money, sound money is very important for humanity. It's, it's, it's good for trade, it's good for specialization, it's, it's, it's good for capital allocation and allocation of scarce resources, where to invest, where not, and to have sound money A measure, a unit of account that can be, yeah, counted upon, that can be depended upon is very interesting and, and very important, and we don't have that at the moment, 'cause central banks are printing the money at will, they're using it for political purposes, they're even weaponizing it, and it's like an architect that uses a measure, like a meter or an inch that changes every day. Imagine how a building like that looks, after the- Architects are finished, and that's our economy at the moment. So we're, we're building with a, a measure that is, that is changed every day, and Bitcoin will, for the first time, introduce a constant, and that is the twenty-one million coins. So that will, for the first time ever, be a constant in finance, like there is a constant in, in physics, like the, the, the constant of light, the, the, the speed of light, for example, well, in, in mathematics, and, so, Austrian perspective, and I talk about this with, Seif and Dean lately, that could be very interesting, this, this constant, and maybe with that comes a sort of predictability, but at least a totally different kind of economy, a separation of money and state, and, in my opinion, it will even unleash the next renaissance with science at the very heart of it, but also with art and, and, and Freedom and, and a totally different society than we have at the moment that is dominated by, governments and states, and this one will be more sovereign, individual, and, and, and math and art based, so yeah, that I find that a very hopeful perspective, and, and that's maybe apart from the investing, the main reason why I find Bitcoin so very, very interesting.

Yeah, there's certainly a lot of factors in there that really point- To being bullish at this point in time and, some of the earlier points you were just making there, like the cash and carry strategy. Now, obviously, for those of us who are more hardcore Bitcoiner, we wouldn't wanna give up the upside of holding Bitcoin, but for somebody who's a little bit more trying to dip their toe in here, this is an easy way for that kind of person to, if so long as they have the right institutional setup to be able to achieve that kind of strategy, and I think the other point that you raised is It's really interesting in terms of where the next, let's say the next big amounts of demand or the next, you know, potential big markets for people who are gonna come into Bitcoin is this whole cost of carry, which we're seeing in Europe, large, people who have, you know, large amounts of, fiat money in their bank accounts are now starting to get charged for that and Well, if we think from a cost of carry perspective, you can quite cheaply hold Bitcoin for a tiny, tiny fraction of the cost that the, the, these people are paying to hold fiat money in a bank account. So I think that is just gonna really start driving home this cost of holding fiat, whereas historically it was free or you made money out of it.

Oh, absolutely. And, and it's, for example, in Holland, it's not even small Small amounts, it's everything above twenty-five thousand euros, you get negative interest, you have to pay, you don't get interest, you have to pay. And, I can tell you, the moment that the, that, that, that happens, that, that negative interest rate is, unleashed upon your, savings, then the demand for Bitcoin will, will skyrocket. I saw it happening around me with friends and family, I saw it at work, I saw it, in the whole country. Everybody is scrambling to, to get as much as they can. Out, out of this negative interest rate, bullshit. It's, it's really, it's unimaginable what, what that does psychologically and, and of course, it, it just eats your money away.

Yeah, it's a very big injustice and hopefully more people start to see that, and I think they, they will see that over these next couple of years. but I guess with all that said, it's probably a good point to wrap it up at this point. So, listeners, make sure you follow Plan B on Twitter at one hundred trillion USD planbtc dot com. Anywhere else you would like to point people or is that, essentially the main places to find you?

Twitter is the main place. I do have a website with, it's, it's planbtc dot com, and it has all the podcasts and articles, so the three articles I wrote. But Twitter is the main, the main thing and, reach out, if you will, the DMs are open.

Fantastic, thank you for joining me again, Plan B, and hope to chat again soon.

Thank you very much.

So make sure you find my show at stephanelivera.com. Also, I would appreciate any reviews you can leave me on platforms such as Apple iTunes or if you just share the show with your family and friends, make sure they are also learning about Bitcoin. Thanks, that's it from me. I'll see you guys in the citadels.