WBD416 Audio Transcription
The Bitcoin Bull Market Phase 2 with Willy Woo
Interview date: Friday 29th October
Note: the following is a transcription of my interview with Willy Woo. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.
In this interview, I talk to an on-chain analyst and the co-founder of Hypersheet, Willy Woo. We discuss the impact of Bitcoin ETFs, the next stage of the bull market and the role of toxic maximalism.
“That cycle has repeated for the good part of the decade, you’ve seen many of these cycles, and we’ve just reloaded, the shotgun has just reloaded with new ammo, and these guys are at peak, and we’re ready for another run.”
— Willy Woo
Interview Transcription
Peter McCormack: Willy, how are you doing, man?
Willy Woo: Hey, Peter, good to be back. Lucky we can do this; there's a power outage here and the internet was very flaky earlier today, so hopefully we're good now.
Peter McCormack: Is that an energy crisis power outage?
Willy Woo: Well, I live in a tiny village, and I think it's the second time this year. It was a scheduled outage. I don't know what they're doing. We had a typhoon here not long ago, so maybe they were doing some maintenance. So, that's that.
Peter McCormack: Well, I've had fire alarms all night and barely slept, so everything's collapsing, everything's falling apart. Hey, we had an all-time high.
Willy Woo: We did, didn't we; $67,000 no less!
Peter McCormack: We did, $67,000, man. Did you see that coming?
Willy Woo: Well, I said it was overbought from fundamentals, but at the moment we're strong, and I thought we'd break it. I said it was bullish that we went all-time highs, and it did come back, which was what was expected. I didn't think it would come back and smash through below $60,000, so that was a surprise. But definitely was -- it's so overbought right now, it's crazy. But having said that, we know why the price rallied; the ETF.
It's an interesting one, the ETF. We've got now these long-term investors that are now buying futures instruments through the ETF, so that's kind of thrown everything out of whack. Typically, futures is a trading instrument, and now it's also a long-term investment instrument, so it's going to take a little bit of time to find the new balance with how it sits from on chain. Normally, you see it on chain, they're buying, they're moving off to cold storage, and you can guarantee that that's a longer-term investment. Now, you've got a lot of derivatives being bought by ETF holders.
But using the old balance, the price shouldn't be anywhere near the 60s, it should be in the mid-50s or even lower. But, yeah, it's hard to tell right now, because the ETF has changed the balance of the whole ecosystem and we'll wait and see. But I do think it was overbought and now it's consolidating, so it's good. I'm not in any kind of concern that the thing's going to break down here; there's decent buying support, fundamental buying support. So, just biding our time really.
Peter McCormack: Yeah, I don't know what to make of that, because you were surprised it dropped down to below $60,000, but you were also surprised we went up to that high?
Willy Woo: No, I thought we'd go up. I thought we might even go as high as $70,000. I thought momentum is strong, we'll break all-time highs, we'll go up, probably test the Fib, but went as high as $67,000, it exhausted, and then it came back down. I thought it would come back down; I actually thought it would go maybe as high as $70,000, and then come back and test $63,000, that sort of region where there was resistance, and then bounce its way back up. But it smashed through and went down to the 58s.
I think part of that was everyone started leveraging up. The leverage traders started to pile in and go degen long, and whenever you see that, it's just disaster, because too much money on the table to take them out. So, we're going to go through this same old purge of their leverage. And, if you looked at the funding rates, the degen traders, the newbs, they tend to be trading on Bybit, and Bybit was ridiculously long, in terms of their funding rate, and the pros which trade on FTX and Deribit, they were very muted and even negative.
On FTX, it even got into shorting. So, whenever you see that happen, it's pretty obvious what is most likely going to happen, which is the newbs are going to get rekt by the pros. So, it was a bunch of things. There's room for downside, there was definitely a lot of room for downside, and then people longing were very much punished; open value, open interest. The amount of derivative contracts in play is still very, very high, so you're going to expect a bit of volatility right now. But overall, I think macro's super bullish, right, it's really bullish macro. It's just the small, within a week or two, gains. The games that people play are sort of whip throwing a bit around, but the picture's absolutely beautiful panning out to next year.
I'm in no doubt that we're going to break $100,000 in the next run. There's so much coin scooped up off the market by long-term holders that have held for more than five months, so it's really setting up really nicely for another bull run. I'm not sure how long that's going to go, but definitely in multiple months from now. The first quarter looks really good, may run to the second quarter, I'm not sure.
Peter McCormack: Well, I was with somebody yesterday, I'm not going to name them, but it was somebody we both know, and they said they're a "cycle maximalist". I said, "What do you mean?" They're like, "I believe the cycle pretty much plays out the same every four years", he said. I said, "What do you mean by that?"
Willy Woo: Well, that deadline's kind of Christmas, isn't it?
Peter McCormack: The deadline's January, I think.
Willy Woo: Okay, all right. Well, we'll wait and see. Very little chance from the fundamental setup right now.
Peter McCormack: Well, listen to what he said. He said he thinks that Bitcoin is going to challenge gold; it's going to challenge the gold market cap. I was like, "That's a 10X from here", he was like, "Yeah". Well, it's a 9X, I think. I was like, "You think it could go up to $500,000 by January?" He said, "Yeah, I think it will and then, I think we'll get another 70%, 80% retrace". I was like, "Huh, well I'm talking to Willy tomorrow, I'm going to ask him, because I don't see that".
Willy Woo: Is this one of these guys with the name Parabolic in their name?
Peter McCormack: No. I'll tell you offline after the call!
Willy Woo: All right, interesting. Well, I mean the first part I think is quite correct, is that we are challenging gold with Bitcoin, because gold's cap, financial cap, is 40% of its total cap. What is gold right now; is it $12 trillion?
Peter McCormack: I think it's $10 trillion.
Willy Woo: $10 trillion, $12 trillion, yeah, it's had a bad year. So, that's only $4 trillion; Bitcoin's comfortable above $1 trillion, right. So, it's only a 4X from here to essentially challenge gold as a financial instrument. All the gold stored in bank vaults to hitch inflation war, that sort of stuff, is only $4 trillion worth of asset base.
Peter McCormack: No, I think he meant the market cap, the $10 trillion market cap.
Willy Woo: Yeah, the total, the jewellery, the industrial, all that sort of stuff. Okay, yeah, that's got to go apeshit, but I don't know; anything can happen. I think a lot's got to do with fiat, whether or not inflation kicks in and kicks in hard, like Jack Dorsey is a fervid believer of. So, we'll see. A lot of this stuff is just guessing, I think. Absolutely price targets is guessing.
Peter McCormack: Well, I know that, but one of the things I am super interested in is, do we do the same as January, or do we somehow break out of this? I did quote something from one of your reports this month. You said, "We are now in a different world where past activity does not reflect the present", which I thought was super interesting. But are we going to break the cycle, because part of me is like, "Maybe I should sell 10%, 20% end of January, because we'll probably go into a bear market", but if I was wrong, I'd be obviously disappointed?
Willy Woo: I mean, even with -- let's talk about the ETF. We've got now, is it two ETFs? Valkyrie as well as, what was it, ProShares, or something?
Peter McCormack: Yeah, ProShares and Valkyrie. Was there another one, BITO?
Willy Woo: Yeah, I think isn't that, BITO, isn't that the code for the ProShares?
Peter McCormack: Yeah, it might be.
Willy Woo: There's a number of them, and billions, was it $1 billion or $2 billion was bought on the opening week? If you were to say, okay, $1 billion, let's say a nice round $1 billion was bought on the ProShares; had that been a spot ETF or Bitcoin itself, $1 billion of Bitcoin would have got bought.
Peter McCormack: I know.
Willy Woo: But in this case, $1 billion of futures contracts got bought. So, no Bitcoin got held, but what happens is the price of the futures skyrocket relative to the spot price and then some very sophisticated hedge fund type trader is going to come in and they're going to run a cash-and-carry trade. They're going to buy the Bitcoin and then they're going to sell the futures, and they're going to arbitrage the difference, because these quarterly futures often trade 10%, 20% above the spot.
Then, when that contract expires, they'll close at the spot price. So, I buy spot, maybe at $60,000, and I sell the futures contract, which is maybe trading at $72,000, and then I know that I've made $12,000, because eventually when that expires in three, six, nine months' time, they'll be the same. So, that ends up being typically in Bitcoin, the cash-and-carry trade, 20%, 25%, sometimes 30% of yield that these guys get. It's called "risk neutral"; there's no risk in it.
So now, $1 billion was bought on a futures ETF and no Bitcoin was actually bought, it was just contracts, and then these hedge funds effectively buy the Bitcoin, short it, and they're holding it in proxy for -- you can see it, they're holding it on behalf of the futures ETF, and they're incentivised through this cash-and-carry trade, this nice fat premium. And that fat premium just got fatter, because of the demand on futures, and that's like 20%, 30% premium.
So, another way you could look at this is, the futures ETF, $1 billion was bought, only $700 million found its way to spot investment, £300 million got its way into the profit margin of hedge funds. And so, you could have said that's like someone buying $1 billion and then someone else selling $300 million in the mining fee that's dumped back onto the market. So that, in itself, says for futures ETF, there's large demand, you've got a sale pressure coming from futures incentivised fees in that whole food chain. That's significant. That's starting to rival -- that will rival the sale pressure of miners.
So, I am really thinking this whole mining cycle, four-year cycle, is very much coming to an end, because we've got very sophisticated instruments, ETFs, futures, derivatives. Even the Grayscale was 4% of the mining network that they deduct out of their stockpile of 650,000 Bitcoins, and then sell into fiat for their fat paycheque. So, that ETF alone, Mr Barry Silbert and his Grayscale ETF, he is selling down as much as 4% of the mining network. And the mining network, they don't actually sell all of their coins, right, so that gives you a perspective of the kind of dynamics at play right now. So, everything's different now.
Peter McCormack: Let me understand, Willy. When you say about this cash-and-carry trade, they buy the future and then they buy the spot --
Willy Woo: Sell the future, buy the spot.
Peter McCormack: Sorry, sell the future, buy the spot; who are they selling the future to?
Willy Woo: The guy that's going long Bitcoin. If I think that Bitcoin's doing to $100,000 by 31 December and that contract is currently trading at, whatever, $70,000, well I know that I'm going to sell at $100,000 in December, so I'm willing to buy that futures contract. Effectively, the premium I pay is the cost of the other person selling you that contract. It's basically funding.
It's like, if I wanted to buy Bitcoin that I can't afford to buy and I'm borrowing from the bank, you have to pay the bank interest, so you could do that via borrowing. That's called margin leverage. You can borrow money from the exchange and leverage, and that's what we traditionally had with the early leverage we had with Kraken, Poloniex, that kind of margin.
Then, when BitMEX came out, they introduced futures, and futures is a different contract, where the funding rate in the calendar futures at least is booked into the contract. Then, there's a time value in the contract and as it gets closer to expiry, it starts to taper down and down and down; that premium comes down. And that's really another view into the funding; you just consider it funding.
Peter McCormack: So, because these people are sat on large amounts of cash, they can sell the futures to you and buy the spot, and then it's a really easy --
Willy Woo: No, they've bought the Bitcoin. So, if Bitcoin goes up and they're shorting up, nothing happens. The Bitcoin price moons and you're shorting it; well, your Bitcoin on the other side is mooning on it, so you're netting out at zero, plus the decay in that contract. That contract value is starting to drop and drop and drop, and that's your yield.
Remember, I'm buying at $60,000 today, I'm buying $60,000 worth of Bitcoin, 1 Bitcoin, and I'm shorting one contract at $70,000. So, I'm being paid, because I'm selling it, I've sold this contract, so I've been paid $70,000 right now. I'm buying Bitcoin for $60,000, I've just pocketed $10,000, and I know that that contract will be worth whatever the price of the Bitcoin I'm holding is when it expires. So I know, if I'm going to sit on this, by the end of that expiry, I've creamed the carry, I've creamed that premium, which is the $10,000.
Peter McCormack: It's a sort of risk-free trade?
Willy Woo: It's a risk-free trade if you consider fiat your golden light and I value fiat and I want some yield on fiat, US dollars. But if you're valuing Bitcoin, then you're losing against Bitcoin, and your wealth in Bitcoin terms is dropping. So traditionally, hedge funds from the traditional world will do the cash-and-carry trade, because they're all about getting 20%; that sounds sweet, when I can only get 1% or 2% in bonds. So, in their view, that's great. As bitcoiners, we go, "Well, that's kind of shitty".
I mean myself, I will always have a partition in cash, because cash just buys that nice buffer of liquidity. Bitcoin's very volatile, and if we get a real crash, there's some cash to buy the dip. And I don't want to sit that cash in a bank, so maybe I'll do some cash-and-carry and get 20%, 30%, 40% to mitigate the money printing that's happening with the Fed. So, by doing this, the money goes back into crypto, you get the yield, and it's roughly enough to offset the Fed's money printing, so you're not subject to dilution and you've got a little bit of a safety buffer.
So, I can even see a lot of crypto people doing these kinds of trades to get yield on their US dollars, and a lot of people doing this on DeFi, which I haven't looked too deeply into. But yeah, there's definitely a lot of yield to be done in there as well.
Peter McCormack: Okay, wow. So, let's go back to the cycle changing and the data changing, because I think that's a super interesting point. We have been subject to these four-year cycles, where everything does play out the same, and maybe this year looks like 2013 and 2017 looks like whatever; but we have been subject to these cycles and these volatile moves. The data you're saying is starting to change, what specifically are you seeing that's changing; what is it that's making you go, "Okay, I think we could stretch out into Q2 for the bull market"?
Willy Woo: I mean, this started a long time ago. I think we talked about this over a year ago, I think we had this conversation. The realisation, having talked to one of the large OTC brokers, saying that the exchanges are selling more Bitcoins than miners, and that was like, "Woah, suddenly we've got a new supply side that's not acknowledged by the market", and seeing how big that is. So, there's one overlay of demand and supply from all the participants in the ecosystem that used to be just miners selling and everyone buying. Then it became spot exchanges also adding to it, but you don't really trade a lot in spot.
Then, suddenly derivatives came into it, and the volumes they do are a 5X or 10X higher, and so suddenly the exchanges had more sell pressure. Then Grayscale out and their 2% fee added way big sale pressure, and now you've got futures ETFs, and it just keeps going on. And you've got the introduction of mining becoming corporate, publicly listed companies, who now don't sell their coins and they're now hodling and using equity to fund their operations, because people who buy mining are wanting to get exposure for the coins they're hodling, that mining are hodling.
So even now, there's a transition from the sale side from miners getting weaker, because they're becoming large entities that have been traded on equity markets. So, you've got a whole bunch of fundamental changes. And then, when you look at the -- then, on the demand side, which is the buying demand from hodlers, we can look on chain to see what that looks like, and that's looking really, really bullish.
I didn't know what would happen at the end of this year. I think I said this many times, "I don't know what is going to happen. When is the top; what is the price?" I said, "I don't know when the top's going to be" and a lot of what the price will be is when the top is going to happen. But I could tell you third to fourth quarter, and end of the third quarter, we could start to see that coming out of the $30,000 zone, we had this huge amount of new accumulation that registered by long-term holders, which is a Glassnode metric.
If you look at how long coins have been held on a wallet, and it turns out after five months, 155 days, the probability of that coin moving starts to plummet at a faster rate as a sea change. So, you can go, probably this coin moving into this wallet, and then it moving off somewhere off, like being sold, is usually very high for the next day and next day. So, it starts to decay. The longer a coin has not moved, the more chance that it's not going to move tomorrow. Then, at five months, there's a sea change.
So, when we look at that and you define the long-term holders, the guys that aren't going to sell anything that's held for five months or more, they're long-term holders who run a ratio with people that may sell, which is under five months, and you get these really nice oscillations, really nice charts, that show every time we're preceding a bullish run, this ratio of long-term holders holding the supply dominating, and then it's always, once they've had their fill of being at peak levels of holding the supply, the price rallies. And as it rallies, then they start to sell down.
Effectively what happened was, the rally at the start of this year up to $64,000 brought in the previous guys that were long-term holders sold out and we brought in a whole bunch of new guys that bought that rally. They are now aging to five months, and they are our long-term holders now. So, they're kind of waiting for the price to rally into six figures, and then you'll see them start to sell. As they sell, the metric starts to drop down, the long-term holders give up their coins to the next wave of new guys coming in.
So, you can see the demand/supply cycle, people scooping up coins. They get their run, they sell into the next rally. The next cycle, people buy into that rally, and they become the next long-term holders. Then they sell at the next rally, and so that cycle's repeated for a good part of a decade. You've seen many of these cycles, and we've just reloaded. The shotgun has just reloaded with new ammo and these guys are at peak and we're ready for another run. It's a very reliable indicator.
So, no matter what happens around this choppy next few weeks, we know, with very high certainty, that we're going to get a good rally off the tail-end of this year. The fourth quarter's going to be great and generally with the time signatures of these things, it's going to run into first quarter, and we'll just have to see how it runs into the second quarter of next year. Maybe it goes even deeper. But it's still really early. They've just reached peak levels and they are now consolidating at that upper ceiling, those long-term holders.
So, I have no qualms at saying that this is what I think's going to happen and I don't think it's a risky call. I think it's pretty set in stone looking on chain.
Peter McCormack: The narrative of the halving, as the halving priced in, was based on the supply changing. But if miners are holding onto their coins, it's kind of a narrative and a self-fulfilling prophecy, rather than actually something based on the supply changing every day anyway. So, it's feels like it's a fast-playing market cycle that's just based on everyone expecting it to happen, rather than based on the fundamentals of the miners selling?
Willy Woo: Well, we can see the miners selling, we can see how much the miners are selling on every hour really, on Glassnode chats. You can actually see the coins leaving the miners' wallets; we can measure that. But I'm actually talking about the theoretical maximum, even if they keep selling everything; this is what we would get. It's not that significant if they were to sell all of their coins consistently, because they are now outgunned by the other sellers, the ETF guys and the derivatives exchange guys.
Peter McCormack: The guy I was with yesterday said, "These cycles are a psychological attack on bitcoiners", because you can get through a cycle and be more profitable than you were at this point, but you will still have come down from a very high point. You could shoot up to be worth millions and millions and then come down. In your head, you should be happy, but it's a psychological attack, because trying to sell the top's so hard.
Willy Woo: Yeah, this is human psychology. If you give someone $1 million and then you go, "Oh, I made a mistake, I was only meant to give you $0.5 million" and you take $0.5 million back, they're really sad; even though they started with nothing, they got given $0.5 million, but because they reached their peak, they're sad! So, yeah, I agree totally, it's a funny quirk of the human mind. We are much more wired to be sensitive to loss than the euphoria of gain.
Peter McCormack: Did you see that Shiba trade?
Willy Woo: I haven't looked at their chart, but it's all over Twitter.
Peter McCormack: $8,000. Somebody bought $8,000 worth 400 days ago, and it's now worth $5.7 billion!
Willy Woo: Billion, seriously?!
Peter McCormack: Billion, yeah.
Willy Woo: Did they hold it?
Peter McCormack: Yeah, their wallet's still available. I'm also wondering if --
Willy Woo: Well, a multi-billionaire got minted; doesn't that make them go onto the Forbes Rich List?!
Peter McCormack: Probably. Probably the greatest trade of all time.
Willy Woo: That's great, the Rich List, you know; SpaceX, Tesla, this mogul, that mogul, and then we've got a SHIB mogul! That's making a mockery of the Rich List really. I think crypto's starting to make a mockery of a lot of the traditional --
Peter McCormack: Well, making a mockery of money, what's actually happening right now. I doubt there's the liquidity for them to actually access the $5.7 billion.
Willy Woo: Yeah, I would agree with that. You'd have to exit very slowly and hope that -- exactly. That's one of the things you learnt in 2017 with a lot of these shitcoins is that, when you need to exit, you probably can't, and all the numbers you put on your portfolio and go, "I own $X million"; no, you don't, because if you sold, that token would go half, and that's just you, let alone everyone else who's going to pile into selling when they see you selling.
Peter McCormack: I think I would absolutely sell my moral background to trade $8,000 at $5.7 billion and take all the shit that comes with that; I think I would do it!
Willy Woo: I don't know. I think trading is amoral, mainly amoral. I think there's immoral things in trading, but you're buying, you're selling, right; there's no morality in it. "You can't buy that token", why not? You're just trading it. It's not like you're investing in it and then you're trying to shill this token to as many people and your friends and family as possible to get richer; that's a morality issue. I think hodling and shilling is a morality issue. If you're trading, one day you're buying, one you're selling, you don't give a shit, it's amoral. You're not attached to the coin.
Peter McCormack: Dude, my sister bought Shiba, right. She messaged me. I was like, "Lorraine, have I not taught you anything? Just buy Bitcoin slowly", or whatever. I'm actually scared to ask her how well she's done. I'm afraid she's going to turn round --
Willy Woo: She's going to buy you out and change this to What SHIB Did!
Peter McCormack: Imagine that; on one trade, she's beaten me on five years of Bitcoin?
Willy Woo: Yeah, that would be hilarious, right.
Peter McCormack: That would be hilarious.
Willy Woo: But I think that's good to humble the maxi tribe. Humility goes a long way, and I don't know, the maxi camp's getting a little bit toxic and a bit full of it, I think.
Peter McCormack: Well, I did an interview yesterday with this person I told you about. Well, it's going to be obvious now, because I've said I did an interview with them, but it's all about toxic maximalism, and they did the research back into the history of Bitcoin. It's a really interesting point he made. He said, "Things are going to get a bit crazy over the next decade, decades, and there is going to be a transition of money and power as Bitcoin continues to grow and sovereign currencies continue to collapse. And there's going to be winners and losers in that". And he said, "I feel like we're going to owe the losers an explanation of what happened", like why did this happen.
The impact on some people's lives can be quite extreme. When you see high inflation or hyperinflation, but hyperinflation devastates nearly everyone; but in high inflation environments, we've seen the collapse of Lebanon, Turkey has high inflation at the moment, Argentina right now. But if see that largely hostile world with high inflation events, yet there's this group of bitcoiners getting rich, there's going to be some people that want to know what happened and why it happened, and he feels like this needs explaining; and the role of the toxic maximalists for ensuring that this transition happens as best possible is really important. I'm going round in circles on it, Willy.
Willy Woo: I thought you were going to say there might be a backlash against bitcoiners.
Peter McCormack: I think there will be; I think there already is.
Willy Woo: I mean, everyone wants to backlash against the rich and blame. But hell, every bitcoiner I know did their most to try and tell their friends. Like you, your family hates you on Facebook, right, your friends and family?
Peter McCormack: Yeah, they hate me. They're like, "Shut up about Bitcoin, for fuck's sake"! I've been telling them since $1,000.
Willy Woo: I think it's interesting to see how it will transition. This last I'd say three months has just seen how Bitcoin now has really gone mainstream. I think there's more and more realisation in the last three months with particularly the ETF, but not only that, we had the public company side of things. But then we had a country ban it and then everything got stronger, and then more and more. More and more of the US is opening up to it, we've got regulators thinking about allowing banks to hold it on their balance sheets.
Peter McCormack: The FDIC Chairman brought that up, didn't he?
Willy Woo: Yeah, so I don't know if we're going to -- there's been this argument that you can ban Bitcoin, that governments can ban Bitcoin. It doesn't seem that way when you've got publicly traded ETFs and banks looking to hold it and Mastercard is allowing deposits into accounts with it. It's just more and more, the financial system's coming into it. So, it's a different phase now, and I don't think the Bitcoin tribe is at a maturity level to -- what is the argument to say that toxicity's going to help this explanation?
Peter McCormack: No, we did an interview on toxicity. But what he said, he started out by explaining the journey he went on. So, his starting point was, if Bitcoin takes over and it becomes the dominant financial asset, there will be a lot of people who get rich on it, and there will be a lot of people who might lose out. And this transition in the world, it's not going to be just a simple, peaceful transition. It's peaceful for the bitcoiners, but there could be collapse to certain parts of society. We will move to a world where…
There are people who have social security, there are people who have welfare. In the UK, you get a bus pass if you're a pensioner. There are all these schemes. As you move to an environment which is more dominated by Bitcoin, there's likely going to see these social programmes, there may be less of them. He's saying that is a potential. He's saying the world is going to look very different and he said, he feels like an explanation will be owed as to why this happened. And in doing so, in doing the research and understanding how Bitcoin grew from nothing to where it is, he realised that the toxic maximalist side of things has been really important for Bitcoin to get it where it is, and it's going to be really important for it to continue. So, if I didn't explain that right the first time, that's what I meant.
Willy Woo: Well, they need a defence system, like the thorns on a little tree, the thorns come out to protect itself until it's a bit bigger.
Peter McCormack: Yeah, because it was so fragile to begin with, we didn't realise how fragile. If the government wanted to shut down Bitcoin in 2013, it would have been super easy. I mean, some people will say you can't, but it would have been a lot easier. You could have regulated away.
Willy Woo: It would have been easier, but I don't think it would have been shut down. It would have been a lot easier, you could have attacked it financially, etc. But yeah.
Peter McCormack: But the interesting point now, Willy, is I feel like we're getting to the point where, is it Jason Lowery started talking about Bitcoin is like a nuclear defence system?
Willy Woo: He's a military guy, right, he's part of the space cadets.
Peter McCormack: Yeah.
Willy Woo: He's our first genuine Bitcoin space cadet.
Peter McCormack: Yeah, and I met him. But he was saying governments owning Bitcoin is like governments owning nuclear weapons, in terms of, "You've got some, we've got some"; it's a financial defence. And I find that super interesting, and the reason I find it super interesting is I look at the US and the US seems to have a relatively friendly approach to it on the regulatory side. Now, some people will say, "No it doesn't, look at this, listen to this". But what I'm saying is, it feels like something the US would normally just ban, and it still exists.
It feels like this is actually a really powerful tool for the US. Most of the companies are in the US, a lot of the Bitcoin is held in the US, a lot of the wealth's held in the US, so it's actually good for the US. I'm wondering, you saw the rumours of China unbanning Bitcoin, they're having a public comment on it, I wonder if they realise --
Willy Woo: Are they actually? I thought that was fake news. I think someone was citing the source as themselves!
Peter McCormack: Oh, was it?
Willy Woo: Yeah, was it for real or not?
Peter McCormack: I thought it was for real.
Willy Woo: Okay. I don't believe it until I see it, but that's totally against what China's policies are.
Peter McCormack: Yeah, it's actually in the Independent; interesting. I mean, look, whether it is or it isn't, I feel like China banning Bitcoin mining seems to be a huge mistake.
Willy Woo: Yeah, geopolitically, I suppose.
Peter McCormack: Well, I mean just financially. Even if they didn't want to have people own or use the currency in China, you can still outsource the service to the rest of the world to just supply energy to operate the miners, because the revenue would still make its way back into China.
Willy Woo: Yeah, well it's also a vote on the network, I think, as well. If you have a majority say, and also a totalitarian government, it's your best shot to shut down the network, because you can 51% attack it, because you just tell all the miners, "No, we're taking control of that network". And instantly by decree, you can double-spend on that network. You can't do it anywhere else, right. But now, that's taken off the table.
But I heard this thing, I read it, that someone was musing on Bitcoin US and China, and you've got one side, you've got a very centralised government that's controlling everything. So, if you were going to compete with that government, you've got to do the opposite. You wouldn't compete with iOS and the iPhone by doing an imitation; you have to do the Android thing, which is open it up. You know, Mac and Windows.
So, Bitcoin is a better match for the US, it's a democratic country, mainly, and it's decentralised with its state-run system, and it does kind of make sense, even though we're in a US dollar reserve world, and it's kind of like going into competition with your main profit centre. But in the long term, I think it's a really good play.
I don't think governments are thinking like this, I don't think they're thinking about it much at all, but I think it's just a consequence of how the US is structured, where you've got a lot of moving parts that are independent and you've got a lot of different charters, and there's checks and balances, and so the whole thing meshes together and they're each doing whatever their directive is, right down to individual states wanting to open it up and others not.
So, I don't think there's any kind of coherent policy. I don't think there's any kind of coherent conspiracy. I think a lot of people create conspiracies, particularly in our space. I think it's just a whole bunch of people going through the machinery of it all. And, this touches on, we're talking about how governments work and I recall, do you remember the Antonopoulos 2014 Testimony to the Canadian Senate?
Peter McCormack: I think so. It's been a while since I've seen that.
Willy Woo: It was a YouTube, two hours long, and it was very articulate, and Antonopoulos gave a very good case of what this technology was and what benefit it was to society, and how overregulating, or even regulating it at that early stage, would destroy its potential. Not long after that testimony, Canada went ahead and decided not to overregulate it and they allowed it to flourish. And, we've got a spot ETF in Canada; we've got a lot of these things happening in Canada that are not happening in the US, because of one person.
I actually know the story behind it. It was another person within the government that was a bitcoiner, that got the budget to get Antonopoulos to do a whole one-year study around Bitcoin. That person ended up going to CoinDesk afterwards, but there was a chain of things that happened that made major change at the governmental level. And I did not see any Bitcoin toxicity defending Bitcoin in that. It was just very smart people working within the system and being very respectful.
One of the things that struck me about that testimony was how much respect and honour that was showered upon Antonopoulos, and they were very, very appreciative. I was like, "Wow, there's a lot of good energy in this room". That, to me, was a model of how change is made. And I see this is what Michael Saylor says as well, the cheery, likeable attitude so you don't create enemies.
So, I'm not bought into toxicity as being a defence to this network, and maybe a defence against shitcoiners. Scammers, yes, but not at the state level, change-making. I think the toxicity is hurting the credibility of Bitcoin.
Peter McCormack: I agree with you on that though. I don't think at the state level, where the regulators are.
Willy Woo: I believe in the hedge fund world and that sort of thing and the bankers, yeah.
Peter McCormack: Well, I've got a mixed view there. So, at the regulator level, I don't think there's any benefit in being completely hostile and telling them to go fuck themselves, we're going to do this anyway, because they're the people that can create the rules and make life a bit harder. Yes, Bitcoin might win anyway. At the hedge fund level, if the hedge fund guys are interested in Bitcoin, it's super interesting. But these vulture hedge funds that seem to getting involved in things like -- I think Worldcoin is atrocious.
Willy Woo: Oh, the venture capitalists, yeah.
Peter McCormack: Yeah, so the VCs who get involved with shit like that, I think absolutely be toxic with those guys. I think they're vultures and I think they get rich off making money off other people's misery. I think at the protocol level, you can talk about it, thinking back to 2017, when there was an attempt to co-opt Bitcoin Core, increase the block size, etc, and actually I think that version of the code failed. Luckily it didn't happen, but I think there was a bug in the Jeff Garzik version that failed, and that really was an attempt to change Bitcoin and co-opt it away from the devs, which I think some of the toxic behaviour around that set in place what should be expected.
I remember also John Carvalho being, whether you say toxic or firm doesn't matter. I think some people confuse toxic with being abusive. I think we can all agree abusive is wrong. And then, I think on the scams, the toxicity is about protecting people. But there's no neat, even line, because it's like, "Well, what is a scam?" So, the definition is about these lines get kind of messy.
But in the end, as somebody who's moaned and whinged about people on Twitter, actually I was watching the Chappelle special recently, and he said something along the lines of, "Weren't you upset about what people said on Twitter?" He was like, "I didn't give a shit, because Twitter isn't real life". I was like, "Yeah, fair point".
Willy Woo: Yeah, but I have yet to meet someone where it didn't make some kind of impact. I think most people get triggered on it. I think it you don't get triggered on it, then I believe you, but I think most people at some level get triggered.
Peter McCormack: I do.
Willy Woo: Anyone with a large following will get an immense amount of trolling, and maybe 1% of it gets you right at that spot where you're triggered.
Peter McCormack: On the wrong day with the wrong words.
Willy Woo: On the wrong day, whatever. But everyone has a trigger; it eventually gets in. Yeah, anyway.
Peter McCormack: Well, anyway, so it's going to be very obvious who that person I spoke to was shortly. I'm just going to say it anyway, fuck it, it's Pete Rizzo!
Willy Woo: Oh, Pete Rizzo, interesting, okay. I like him. He says what it is. I appreciate that about him.
Peter McCormack: Yeah, I like him, he's quite challenging. He's a challenging interview, because he really challenges your questions or your assumptions, but he's got all these theories. But I trust him on it, because he's gone there and done the work. He's done all this research on the history of Bitcoin, the pre-history.
Willy Woo: He's a journalist, he's like a real journalist.
Peter McCormack: He's a proper journalist. And he's done the creation of Bitcoin, and now he's done the fork wars. So, I think in doing that work and doing that research, he himself has become more of a Bitcoin maximalist, because he's like, "I understand what we have here in our hands, I understand what we've created, I understand what we've been through and I understand what we might go through in the future, so this maximalism is really super important". It's a fascinating interview, it's one worth listening to.
Willy Woo: Right, okay, I'll do that. I think, is he writing a book? It sounds like he is.
Peter McCormack: I mean, my assumption is a book is coming. He hasn't said so, but my assumption is a book is going to come at some point, and I think it will be a fantastic book.
Willy Woo: He'll be the nominated Bitcoin historian.
Peter McCormack: I think he's doing it actually. I think Aaron van Wirdum's done some of it, and I think Nic Carter as well, but I think he's taken that place now.
Willy Woo: I'm really waiting for the big budget Hollywood movie on, not The Social Network, but the Bitcoin Network with all of the drama, because there's much more drama in the Bitcoin story than the Facebook story or the Steve Jobs story. You see some of these big screen depictions of the story, and we've got massive crazy stories that happened in Bitcoin, from Silk Road days, right through to the fork wars.
Peter McCormack: Wikileaks, Craig Wright.
Willy Woo: The whole Satoshi mystery. I mean, I think that's one of the key points when we see that movie. That will be, I think, the middle of the mainstream adoption. I think, are we at, I forget the number; I think I said last time, are we at 20% of the US, something like that, having Bitcoin?
Peter McCormack: Something like that.
Willy Woo: Yeah, and what is it, is it 12.5% is -- what's on the normal curve, the first? You've got the early pioneers, the early adopters and then the early mainstream, which we've crossed, right; we've comfortably crossed by probably over a year now.
Peter McCormack: Crossed the chasm.
Willy Woo: Crossed the chasm, and ready to go into half the population very quickly in the western developed world. So, I'm waiting for this movie. That will be fascinating and it will garner a lot of audience.
Peter McCormack: Well, I wonder, because the sequel to The Social Network is Bitcoin Billionaires, right? So, there's certainly a movie about the Winklevoss. I think that might have been greenlit.
Willy Woo: Oh, really? Who's the producer/director?
Peter McCormack: I don't know.
Willy Woo: That's a brilliant book, I love it.
Peter McCormack: Well, The Social Network was brilliant, because Fincher directed it. You had a proper director at the helm. That film shouldn't have been a brilliant film. It's the story of Facebook; it should have been cheesy and crap. Because Fincher did it, it was brilliant.
Willy Woo: Yeah, he created the emotional character tension. That's great. I really like the Bitcoin Billionaires, it really reframed the Winklevoss Twins as the heroes and Zucks as the villain, which is an exact flip of The Social Network. I really enjoyed that.
Peter McCormack: Here we go, "Cameron and Tyler Winklevoss are co-financing a film based on Ben Mezrich's Bitcoin Billionaires, the follow-up to The Social Network. They will return to the silver screen in a film adaptation of Bitcoin Billionaires. According to a report from Deadline, Cameron and Tyler Winklevoss will co-finance the film, which picks up the story where The Accidental Billionaires left off, with them receiving a $65 million settlement from Facebook, which they went on to invest in Bitcoin during the early years of the cryptocurrency boom".
So, I guess it's going to include them now going out to Ibiza; is that where they met Charlie Shrem? They met some guy at a bar in Ibiza.
Willy Woo: Yeah, it was Shrem, and he took them down to his mancave full of computers and got them into it. The irony, if the Winklevoss exceeds Zuck's net worth; that would be highly ironic!
Peter McCormack: I would love that to happen!
Willy Woo: I'm just trying to find the price at which that happens. Where is he on the Rich List? I'm just going down the Rich List.
Peter McCormack: He's $116 billion.
Willy Woo: $116 billion? Okay.
Peter McCormack: And they've got $8.6 billion. I think you've got to consider them one entity.
Willy Woo: Right, okay, we'll do that. So, they own 1% of the supply, right, roughly 2.1 million Bitcoins.
Peter McCormack: I don't know if it's that. I think they bought 1% of the supply at the time they got involved. I don't know if they kept stacking.
Willy Woo: Oh, right, I thought they got 1%. How many coins were minted at that point?
Peter McCormack: I think it was about 120,000.
Willy Woo: No, you mean Saylor's got more through all of his holdings?
Peter McCormack: Potentially, I mean I don't know. It's not the kind of question I ask them.
Willy Woo: It was so early in the network. I thought they were going for the whole 2.1 million. If that is the case, then they're worth -- it's basically $55,000 per Bitcoin, ironically. Oh, no, sorry that's wrong. I was out by a zero. So, 210,000 Bitcoin; that's about right. Okay, so that is basically $0.5 million per coin and they exceed Zuck's wealth.
Peter McCormack: I don't think they've got that. I think it says they've got about 70,000 here.
Willy Woo: That seems low. No, you mean Saylor's got more?
Peter McCormack: I don't know if they carried on stacking and also, I don't know how much they used them to invest in their businesses. Either way, whatever, I'd fucking love them to crush Zuck.
Willy Woo: No, they never released their coins from cold storage. It's covered in the book. It's just scattered through safety deposit boxes all around the world, and I know that they haven't, because there's too much OPSEC to even go into one of those.
Peter McCormack: They could never do it again!
Willy Woo: It's just frozen, locked up forever. They could probably trade paper around it or something!
Peter McCormack: It would be so funny if they ended up crushing Zuckerberg.
Willy Woo: It would be awesome; it would be total karma.
Peter McCormack: I saw them the other night actually.
Willy Woo: Did you?
Peter McCormack: I don't know why I'm bringing that up.
Willy Woo: You're like mingling with the rich and famous over there!
Peter McCormack: Yeah, I'm dripping with poor when I was hanging around with them. No, I had a catch-up with them on a couple of things. But the thing about them is they're actually really super nice guys. I don't waste their time, but whenever I need anything, they always get back to me. In fact, I think I said that when I first interviewed them. I was like, "Do you know the price where you crush Zuck?"! No, they're humble about it, they're really nice guys.
Willy Woo: It's like $1 million Bitcoin. It does look like it's 120,000 coins though. I imagine they have more, because they earned some through Gemini, etc.
Peter McCormack: Yeah.
Willy Woo: Good on them.
Peter McCormack: All right, man, well listen, we are coming to an end, dude. Give me a price target for the New Year, the one thing you don't want to answer; where are we looking now?
Willy Woo: I don't do price targets, man.
Peter McCormack: I know, but you have an upper bound.
Willy Woo: It's so weird to be asked that. Everyone wants a price target.
Peter McCormack: Of course they do!
Willy Woo: Okay, at the end of the year? I'll tell you what it's going to be below. It's not going to go above $200,000 at the end of the year.
Peter McCormack: Okay, so I win my bet.
Willy Woo: It's not going to go above $200,000. It's going to be above now; that's my target! It's going to be $60,000 to $200,000. Or January, theoretically, it could go a little bit above $200,000 if everything goes crazy. But there you go, you've got a good 3X to 3.5X range there. It's really hard, you know. You know what it's like. It's like a timer about to go off, then it explodes. Once it explodes, it makes a run, but when does it pop? It's kind of random.
So, there's no, I don't know, there's no data that predicts that. It can just frame the probabilities. So, there you go. You just want clickbait!
Peter McCormack: Well, yeah.
Willy Woo: It's like, "Say something that makes me money, bro"!
Peter McCormack: Hey, listen, dude, every time I have a chance at clickbait, I don't do the clickbait title.
Willy Woo: Oh, don't you? Good on you, okay.
Peter McCormack: My last one, I got told off for the last one, because it wasn't exactly what the show was.
Willy Woo: Was that for my show?
Peter McCormack: Yeah, what did we do? We ended up just talking shit for the whole show.
Willy Woo: I know. People liked it, and I was like, "What the fuck?" I know I was genuine. The last two episodes, I was like, "Don't listen to this". This is just, I don't know, you rabbiting on on shit that you want to talk about and I said, "Don't listen to it!" People thought I was like -- I was genuine, I was like, "Don't listen to this, this is not on chain or anything like that"!
Peter McCormack: People loved it, honestly. I got so much good feedback. I think they can read your newsletter and listen to you anyway, but I think people really like your thoughts on things. So, it was a Through the Keyhole with Willy Woo, Into the Life of Willy Woo!
Willy Woo: There you go.
Peter McCormack: Well, when am I going to see you again, man. When are you going to be out and about?
Willy Woo: I think I'm going to blow this joint early next year. I mean, I would have loved to have left now and make Tone's summit in Dubai, it seems like a lot of fun, but baby's a little bit too small. I think he'll be ready in the start of next year to get a little bit mobile. I so look forward to that, yeah.
Peter McCormack: All right, man, well listen, love to see you, man, love to see you in person, hopefully have a beer at some point and thank you.
Willy Woo: Yeah, totally; totes!
Peter McCormack: Totes obvs! I'm going to come up with some really clickbait-y title now!
Willy Woo: Okay, Bitcoin to Infinity, there's your price target!
Peter McCormack: Yeah, there you go, Bitcoin to Infinity, brilliant! I'll tell you what, if I do that -- I'll tell you what, did you know my biggest ever show is a Willy show, let me just check. Hold on.
Willy Woo: What was the title? It was a price target, I'm sure.
Peter McCormack: Probably. Oh, no, my third and fourth are both Willy shows. So, the top show's President Bukele, the second one's Weinstein, but three and four are Willy Woo and Willy Woo. So we've got, Is the Bull Market Over, and How to Trade the End of a Bull Market!
Willy Woo: Yeah, everyone's looking after their money, that's the thing.
Peter McCormack: Okay. Let's go with Bitcoin to Infinity!
Willy Woo: Or you just go, Bear Market Ahead, Watch Out!
Peter McCormack: All right, man, listen, I will see you in a month. Thanks for this, always love talking to you.
Willy Woo: Okay, catch you later.
