Is the Bitcoin Bottom In? James Check Explains What’s Changed

You know, the archetypes of who a lot of Bitcoiners are, they're some of the most interesting people I've ever met in my life. One of my personal bull cases, given the set of Bitcoiners I've met [music] through my journey, I cannot I cannot bet against them. They're just too smart. That 5th of February sell-off at 60k, even if that's not the bottom wick of the price, right? Price can go lower. I believe that we had a very important event which I call the price pain capitulation. And that means everyone [music] who is sensitive to the drawdown, there are various things that cause people to just panic and sell and exit throw in the towel in a bear market. Number going down is one of them. This is the thing, the last day of a bear market is usually the most brutal and horrible [music] cuz it's a nasty red candle. But that's actually the first day of the bull. So, it doesn't feel like it at the time, but you just reach a point where there are no sellers left. Today, I'm excited to welcome James Check back to the podcast. James is founder of Check on Chain newsletter on Substack, host of Check on Chain on YouTube, and one of the most respected on-chain analysts in the Bitcoin space. Good to see you, James. Likewise, Paula. Thanks for having me back on. So, I know you focus on macro quite closely. What are your thoughts on the recent global uncertainty with the Iran war and how Bitcoin is holding up? Yeah, it's I mean, it's quite a challenge, isn't it? And I think everyone it's it's should be of no surprise that you know, closure of straight of Hormuz, like just the amount of energy that's now impacted here in Australia, you know, you've probably seen plenty of headlines about Australia. Now, it depends whereabouts you are, but certainly regional areas having issues with supply shortage and the rest of it. The knock-on effects of this thing is massive. And you know, energy is the input to everything. There's all the second, third, fourth order things, right? So, there's obviously energy to power shipping. There's energy to power everything that we do in life. There's fertilizers, there's just all these chemicals the whole the whole supply chain is impacted. So, my current base case thinking is this it it does have COVID-esque properties in the sense that it is a very very significant impact to the supply chain. If you don't get a component that goes into your product, you can't finish the product, which means you can't sell the product, which means that then you can't don't have any money. Just jobs, the economy, the whole thing gets impacted. Now, we're over a month into this war now. You know, there's kind of murmurings here or there that escalation, de-escalation. It depends what day you check the headlines as to which direction we're going. So, tons and tons of uncertainty. I think a lot of markets have been risk markets in general have kind of been hoping for a taco, right? Where Trump chickens out, but it's just not going to be that simple because Iran has the taco as well. They're the ones who closed the strait. So, you know, I'm I'm not in a position to kind of hedge any of that kind of stuff or give it a a handicap. All I know is that it the risk of just a correlation one, you know, sell everything because you have to type event is is very high. I think the every day this goes on, even if they open the strait tomorrow, the pig is already in the python of a lot of this disruption. It's going to take months, many months. The more energy infrastructure gets damaged, that starts to look like years. It's just going to take a very long time. Now, I also believe that the market will restructure around this event. So, you know, eventually eventually the strait will have to be reopened because just otherwise it's it's it's complete chaos. Eventually they will have to get there. There will be concessions made at some point in time. But the world has now kind of seen hey, that's a massive risk. So, there are this is kind of a card that Iran can only play once. So, there's no question there's a bunch of headaches coming for sure. I think all risk assets have been kind of hoping that it goes away, but I don't think it is going away. I don't think over time the risk that we just get a real sell everything type of event. Given all of this, for Bitcoin specifically, I've been quite impressed at how well it's held up. It certainly fits if you remove the Iran war, my thesis has been essentially since that February sell-off to 60k, my thesis has been chop consolidation for many many months. And somewhere between, you know, mid-50s up to 80k. I think we just in that range for the foreseeable future. So, in many ways, none of this has changed my thesis, truthfully. It's been quite remarkable how well chop consolidation has kind of overpowered the macro forces that's going on. But I also think there's another component here, which is that a lot of people have already sold their Bitcoin. And that's why I think my I've been talking about this quite a bit. That 5th of February sell-off at 60k, even if that's not the bottom wick of the price, right? Price can go lower. I believe that we had a very important event which I call the price pain capitulation. And that means everyone who is sensitive to the drawdown, there are various things that cause people to just panic and sell and exit and throw in the towel in a bear market. Number going down is one of them. It's the most immediate, acute. It happens first, generally speaking. And there's people who just go, "I can't do this anymore. This asset sucks." And they sell everything. And I think that February move was that price pain capitulation. Now, what follows that is generally a lengthy period of time pain. And that's just like a long, boring, sideways grinding chop. In previous bears, it's been as long as 5-6 months. It's gone up to 12 months in 2015. Like these long periods of time where we just go absolutely nowhere. There's usually a capitulation at the end of that cuz like the time and the frustration of the bottom gets a lot of people along the way, too. So, even with the macro setup, I think the odds of that macro setup being a catalyst for that time pain capitulation is much much higher. I can certainly envision what that will be now. But generally speaking, my thesis in that format has more or less stayed the same since February. I mean, honestly, I've been talking about this specific thesis for I mean, since January 2024, so long before we were talking about bear markets. January 2024, I wrote a piece called Rethinking Bears where I kind of illustrated this is what I think the next bear will look like. And so far, we're pretty much there. So, you know, it it is a thesis. We'll see how it lives up over time. Yeah, I've been reading your newsletter and you have been saying that all along. And I think you said that the higher probability was that that 60k was the bottom, but that we could wick lower. And I'm sure if something major happens, then all bets are off. We could definitely go lower. And one of the great ironies of well, all markets in general is that in order to go down, you often have to go up first. And in order to go up, you generally have to go down first. And this is because you actually have to exhaust sellers. So, I I don't have to touch this earlier, but I do think that that price pain capitulation, that process of like selling off from 126 in October, next thing you know, we're at 80k in November. And then very shortly after that, we're at 60k. It was a very sharp, fast transition from all-time high to bear market like that. And I think that the the speed of that just shocked a lot of people. And whilst the drawdown magnitude is not as bad, the unrealized losses aren't as bad, like the the scale of it isn't as bad, people have behaved in almost an identical way in terms of just crystallizing losses as they have in every previous bear market. So, despite the fact we don't have the same magnitude on many metrics, I think we reached a point of seller exhaustion at least in the in the short term. And from my perspective, I think that's why Bitcoin's holding up very well because a very very large majority of the people who sold or were going to sell did long before there were headlines of war. So, there's just kind of not that many people left to actually be selling. And and for a statistic to kind of illustrate this, in the last 90 days, and just for people to visualize the last 90 days, it's before we've hit 60k. It's pretty much on the run up to 98 just before we had the sell-off down to 60. That whole window of time, war wasn't in the headlines yet. Of all of the coins that have been spending in that last 90 days, less than 8% of them are coming from sub-60k prices. So, people who have cheap coins just sitting on their hands. We are very firmly and purely almost in a realm of top buyer capitulation, which is what bear markets are and that's generally what we see very late stage bears. So, we're kind of speed running this whole thing, which is a very interesting dynamic. But yeah, I I I just my my big picture view is we have to analyze this all market structure, but this bear market using the current setup and the current information and just what are investors doing? I think a lot of people want to see the same metric hit the same level at the same horizontal zone. And I just don't think that's how the world works. Bitcoin market structure, it evolves, it changes. It you know, you have to keep factoring in how the world around changes. And from my perspective, all the metrics that I use, I view them as information, not levels that must be hit. Tell me what the investors are doing and what's the story that tells me overall. Yeah, that makes sense. So, you said chop consolidation for a couple more months based on your best guess cuz obviously you have to look at the data for that. And then what? What's the catalyst to make it go up? So, generally it's got to go down. That's So, honestly, the the usually the the catalyst for trending higher it I mean, it's it's just genuine seller exhaustion. Whilst we got rid of a a very large chunk of the people who were going to sell on the way down, the time pain component, what generally happens is there's a cohort of people and many folks will understand this cuz you've probably been that person. You've lived it. You buy near the top. You huddle through the whole bear. By the time you're like halfway through the bottom formation zone, So, think about FTX era, 2022. Yeah. Luna's imploded, Three Arrows has imploded, Genesis has imploded. We're down at 22K, 20K. And you're just looking at your portfolio going, "Oh my god." And then you go below, right below the previous cycle all-time high, and you're just thinking, "Wow, Bitcoin's actually dead. I've made a horrendous mistake." And then FTX happens, and you think, "Oh god, it's over for a decade. I I just can't." And that is the puke. That's the final thing where people who like thought they had the conviction. They hoddled through the whole bear market, and then they give up at the last day. This this is the thing, the last day of a bear market is usually the most brutal and horrible cuz it's a nasty red candle. But that's actually the first day of the bull. So, it doesn't feel like it at the time, but you just reach a point where there are no sellers left. There is no worse information that can come out. Generally speaking, you need a catalyst, which is a sell-off. It just crystallizes everyone who's like, "I don't want to sell. I'm going to hang in there. Don't worry, I can do it." But they they like thinking about it every time they go to bed, and then you get that final event. They wake up one morning, they see the price, they go, "I'm I'm out. I'm out. My significant other's going to kill me. I feel like an idiot. I've got regret. I'm done. I'm out. I'm not telling anyone about it." That's usually that happens all the same time. It kind of takes several months for people to get there. You need that like building anxiety where they're just checking the price every single day. And every green candle they feel hopeful, and then of course bear market there's more red candles than green candles. And then it goes down again, and you say, "Ah, it just it's just never coming back." And they give up. And is that because the realized price is higher than than we expect? I mean, is you've said that long-term holders almost always sell the bottom. Yes, but there were very special there's a very unique thing that happens in bear markets. So, from an on-chain perspective, just to kind of set the scene here, uh we use a a cohort, which is long-term holder short-term holder. Uh this is devised based on how long a coin has been held, and the 5-month threshold, once a coin has been held for 5 months, if you look at it from a probability standpoint, that 5-month window, all those coins dominate most of the volume. The vast majority of coins that move every day were bought yesterday. The next most voluminous amount were bought the day before, and then the day before that. It's like a power law distribution. The longer a coin is held, the more it stays held. Now, at 5 months, the folks who have held their coin longer than 5 months, there's still a power law distribution of like, you know, 10-year-old coins very very very rarely spend, but they all have the same behavior, which is they tend to sell in bull markets. They have the same like when they do spend, it's consistent. Now, that long-term holder threshold has a very unique period where it's kind of inverted. We generally think of long-term holders as hoddlers, and that is 99% of the time the correct way to think about it. And we think of short-term holders as like fast money, speculators, recent buyers, the hot ball of money. Generally speaking, the right way to think about it. The time when that is the exact opposite is actually at the bottom of a bear, at the absolute bottom. Because what happens is the long-term holders there's two cohort sub-cohorts here. One, long-term holders with coins less than 60K, right? People who are in the money. They have stopped spending. They stopped They really stopped spending in November um at 80K, but they've stopped spending. It's the long-term holders who bought the top. When they bought the top, they were short-term holder, and they hoddled, and they hoddled, and they hit that threshold, and the bear market goes for more than 5 months, and right now that threshold is somewhere down around like 100K. It's coming down the mountain. More and more people have reached that threshold, but then the pain just gets too much. And then they sell. Now, who do they sell to? From our classification system, once their coins are spent, they become short-term holders. They change hands, somebody else buys them. Who are those short-term holders? Because they're buying when the headline is that Bitcoin is dead, we're down 50, 60% from the highs. Everyone's calling it over. How could you possibly buy this thing? You're an idiot. They're actually the like whilst their coins are short-term holders behind the screen, there's a long-term holder who knows exactly what they're doing. So, it flips. The whole thing actually flips for that very brief window at the absolute bottom. So, uh we're going through the motions, or we're kind of trending towards that position. Uh you mentioned realized price and things like that. We can we can go down that rabbit hole if you want. Um but you kind of get this convergence of all these levels down at the bottom. And that's it's it's it's kind of like a at the end of a bear, the only people who are left are people who know what they own. Because all the speculators and the tourists are gone. So, you get this convergence where whether they're a short-term holder or a long-term holder after the final sell, they're all the same person. They're all hoddler. Everyone's a hoddler. It's like a uniform distribution. Your cost basis levels converge. It's a really interesting phenomenon. Hi everyone. I'm [music] excited to share that I'll be a speaker at BTC Prague 2026, the biggest and most influential Bitcoin only event in Europe from the 11th to the 13th of June. Come and join me [music] to hear incredible speakers like Michael Saylor, Jack Mallers, Fred Pye, >> [music] >> and many more, and connect with a community of true Bitcoiners. Get your tickets now before prices go up, and use my link below [music] for a discount. See you there. For those of us who've been in the cycles for more than one cycle, I would consider they would be a little more experienced and expect this a little bit. Yes, so we again we use that 5-month threshold. So, 5 months they technically speaking become a long-term holder. This is one of those debates that folks love to have on Twitter. It's being like, "Ah, 5 months isn't long-term." It's like it it doesn't really matter what the opinion of a long-term holder is. The statistics show that that is the level where the behavior is close enough. Now, within that, it is a perfectly formed power law within that long-term holder cohort. The 5-monthers spend more than the 6-monthers, and the 6-monthers spend more than the 8-monthers, and the 8-monthers spend more than the 2 years. So, the longer they're there, the more likely it's So, it's very much like every coin has a Lindy effect. The longer it's been dormant, the more likely it is to stay dormant, and that continues indefinitely. Um you know, Satoshi's coins have been dormant the whole time. They're so dormant they're probably lost. Probably, right? We don't know, but they're probably lost. So, it is a power law distribution through the whole age set. However, 5 months is where we know that they behave differently. There is a mechanic there. Now, do I take when I'm looking at short-term holders, I will often actually exclude like 24-hour and 1-day-old coins because I don't really care that someone bought yesterday and sold today. What I do care about is if someone bought their coin like a month ago, 2 months ago, 6 months ago, a year ago, they're interesting groups because there's a there's a bit of opportunity cost there, right? If you think about 5 months, go back to 2025. That 5-month period where Bitcoin traded more or less sideways, you've got a gold going through the roof, you've got Nvidia going through the roof. Like there were people out there watching other things go up while Bitcoin didn't go up. That 5 months was painful. It's enough time to experience the volatility. And then when they spend, there's signal in that. There's a piece of information there about what they're signaling to the market about their opinions. They buy yesterday, sell today, who cares? It's it's just daily chop. But the longer they're there, the more information dense those are those coins are. And James, for people who don't really know on-chain metrics really well, how can they help people who are, you know, hoddlers or how can they help? I I know you talk a lot about DCA, and uh obviously if it's going to go down again, there's no guarantees, but that would be a good time to buy. Yeah, I think the the way that I view on-chain metrics, they're certainly information. They're information about Bitcoiners. Um on-chain data specifically comes from the perspective of holders and spenders, right? Which were previously holders. Because the only way to create an on-chain print, either a coin that's not moving or coin that is moving, is to have held it at some point in time. So, it comes from the perspective of holders, and it's very much a study of those holders. Now, within that framework, human beings in markets, but human beings in general, we have all sorts of biases, recency bias, right? Confirmation bias, all these things that cause us to make decisions. And most people, even the hardcore Bitcoin maximalists who only think about the world in Bitcoin, if you think about the world in Bitcoin, all your price charts are horizontal because you're just looking at one Bitcoin equals one Bitcoin. But the reality is you check the price because the price is important to you, right? Everyone thinks in their profit and loss. Now, within that bucket, if you've been in Bitcoin for a long time, and I use the example of the Mount Gox folks who got their coins back in I think it was like July or August 2024, they would have bought those coins at like 50 bucks, 100 bucks, maybe 500 bucks, 1,000 bucks. They received their coins at 68,000. Now, the price very soon after they got them went down to 49K, right? Briefly. Now, imagine you yourself. You bought those coins at $500. You finally received them back in 2024 after 11 years at 68K. 5 weeks later, you're at 49. Is how are you going to think about that? I would wager every single person is not going to look at that and go, "Ah, man, I'm only down I'm only up like 650,000% now, right?" Whatever the number is. They're going to go, "I'm "Oh man, I just lost 30% of my value." That's how they're going to think about it. So, that is why even if you're a long-term holder behind the screen as a person, you've got many more coins that are in the money. When you buy and the price immediately goes down 10%, you get that initial twinge of like, "Damn it! Damn it, I've made another mistake." So, every single person feels these things. They These are just hardwired emotional Yeah. Some investors get much better at dealing with it. Me, for example, I still get that twinge. It goes away after about 5 minutes because I've I've been there before. I'm at whatever. Press on, right? There's another buy coming in the future. So, the more experienced you are, the less you act on those things. Most people in markets are not experienced. They are just not experienced. They don't spend their time studying markets. I mean, you go on X for more than 20 minutes and you'll see a bunch of people who just simply do not have no idea how markets work. They act on their own emotional impulses. I'm of the view that the on-chain data set for Bitcoin is a invaluable and frankly, in my opinion, magic database of human beings making good and bad decisions based on their emotional hardware or their experience. Those long-term holders who wait wait wait and then buy the bottom of the bear and then they wait wait wait again and then they sell the top of the bull, they are people who have mastered their emotions. That's Selling Bitcoin means that they have also mastered their emotions because none of us want to sell Bitcoin because we kind of see where it's all going long-term, but they have beaten that because they they understand that it's actually probably overheated. They've got this like internal clock. They just understand when these things happen. So, it's a study of the smart money. It's a study of the dumb money. In my view, it gives all of us like and all the charts I have are free because Bitcoin database is free. I'm just there helping process and pass it. All of this information is there to understand you're sitting at the poker table and you can see what everyone else is holding. You can see all of their cards. You don't know what the future is. People keep trying to look for predictive signals and stuff. That doesn't exist. Like this idea of like trying to have like the perfect predictive signal is just a waste of time because no no tool, metric, or thing can ever predict the future. But what it can do is help you weight the probabilities and say, "Well, what do I want to see at the bottom of the bear? Like at a de-risked, low-risk time to buy Bitcoin, what will I expect to see?" There'll be very few speculators and tourists. Funding rates and leverage will be very low. Long-term holders will be slowly accumulating. Bad news will stop the price going down. And in terms of like markets just mean reverting, we'll be at very very low levels relative to all these different long-term averages. And right now at 68k, I think, we're at Q15. So, Q15 means only 15% of days are lower versus all a whole basket of different mean reversion models. For me as a long-term like serious multi-year hold Bitcoin investor, I'm very very happy to buy the bottom 15% of all days because those bottom 15% are great buys in every previous cycle. Sure, if even if it goes lower, that's just going from Q15 to Q5 to Q4. Bear markets bottom like the bottom wick at Q4 events. The only bear market where we've got like the the bottom 4% of all the events was when Bitcoin was $2 in 2011. Am I going to wait for that event? No, because that's what 45 and 40k is. That's That's literally a $2 Bitcoin in terms of deviation from the mean. So, for me, that's just not like an interesting I I've done the study and I like the numbers aren't interesting to me. Very happy to buy the bottom 15%, bottom 20% because that means I've got an 80% plus chance of being a very happy stacker, right? Long-term. Yeah, that makes sense because and we're not even guaranteed that it goes lower. Uh it might, like you said, it's based on probabilities. Yep. It'll be interesting to see. >> And it it works both ways, right? So, if you're looking for a if we're at Q15 right now, um and by the way, just for clarity, Q15 stands for quantiles. It's the the bottom 15% of the distribution. So, sure, we might go down to a Q5. We We could do that. That would be I think from memory it's 50k, I think or 52 or something like that. Anyway, the bottom 50s. Um that's your Q4, Q5. Sure, we might go there and if that happens, there's a 95% chance that it's probably the bottom. But there's also a 5% chance we'll get there in the first place. So, you've got to think about it in both angles, right? So, there's a ton of people who just seemingly, at least in my eyes, seem to fantasize about I'm not going to buy until the bottom wick. I'm just going to wait until the bottom wick. It's like when it happens, you'll be looking at your screen and be like, "Oh man, I think I should sell because this is this going way low." Like your emotional hardware will take over. It's what people do. So, thinking about these things in advance, there's probabilities in both directions. Yes, it'd be fantastic. I'd love to buy Bitcoin in the low 50s. I'm also not making it my base case because there's only a 5% chance of it happening and that's too small for me to make a base case. 20%? Yes. Because I that's just the whole range and that's why DCA is actually very powerful because I will buy the whole bottom, right? Not just the bottom wick. I'm not going to stress about the bottom wick. I'm just going to buy the whole bottom. Anywhere we're under that Q20 level, I'm just happy stacking. That's a much more peaceful way to exist, too. Get on with your life. That's it. Holding your Bitcoin in self-custody is an important step towards self-sovereignty, but writing your seed phrase on paper is risky. Paper can burn, fade, or get lost. Micro Seed helps you stamp your seed phrase onto a small steel washer. Buy the device once [music] and use it forever. I love it. It's durable, precise, and easy to transport. Use my link below for 5% off. Now, back to the show. You mentioned one Bitcoin is one Bitcoin and I had a question about that cuz, you know, Jeff Booth had a little video the other day, an interview he did and he said anyone pricing Bitcoin in USD or fiat don't get it. And that's because he looks at it as a whole another protocol. Uh the US dollar debt is insolvent and basically doesn't think they can exist together. But what what are your thoughts on one Bitcoin is one Bitcoin? So, I think the challenge The challenge I I believe Jeff Booth is right. I also believe that my son, who's 6 months old, might be lucky to see that. You know what I mean? Like he might be right. I'm in my mid-30s. I am not expecting his world to be true in my investable lifetime, right? The next 30 years, probably not going to be the primary thing that happens. And the reason, if you look at any currency So, now, he's absolutely correct that fiat currency is insolvent. It long-term, its value trends toward its intrinsic value of zero, right? The paper that it is written on. That's more or less where fiat currency is trending and it is going to accelerate given the world of AI and just everything, the whole technological deflation. And I also think that Jeff Booth's book is fantastic. The thing that I disagree with him on is the humans' desire to do anything to fix their situation. Gold is thousands of years old. I've said this before. I've been on a kind of a history podcast journey recently. I was, you know, listening to the Old Testament of the Bible, listening to uh what's going on like a podcast called Fall of Civilizations, learning how like the Romans and the Byzantines and the Mongols and all that they rose and fell. Gold and silver have just been a backbone of human civilization forever. They are everywhere throughout all of those texts. And yet today in the world that we're looking at right now, some real fourth-turning stuff, most institutional asset holders have less than 1% gold. Most people have no gold. Now, there are pockets where it's culturally significant, India, China, right? Places like that. There are obviously areas where gold is massively owned. However, it is Most people don't own it. You know, I I don't have a single friend. Oh, sorry. That's not true. I have one. I have one friend who I know owns precious metals. No one else would even think about it. Barbarous relic. Bitcoin is even further down that spectrum. So, like all of this stuff may be true, but I just think that the the bar for people actually working out, "Oh, I should hold Bitcoin." It takes a tremendous amount of pain. Great example, right? Now, I use this example all the time. If you look at like an Argentina prior to, you know, when they've got hyperinflation or Venezuela or whatever, there is always a preference for dollars. They choose the US dollar because relative to their currency, the US dollar is like gold, right? Relative to the bolivar or the lira, the US dollar is magic, right? Because it just doesn't go down by 40% in a you know, an afternoon. Um for me as an Australian, right? The Aussie dollar has been doing side It's It Talk about chop consolidation. Most forex pairs just chop consolidate for like my whole lifetime, many people's lifetime versus the US dollar. They kind of go nowhere over a long arc of time. But I still know that debasement is happening and in your in the developed world, 7%, 8% debasement that we really kind of experience, it does compound over time and for us, the the quantum leap from um like the Aussie dollar or the US dollar to gold or Bitcoin is kind of the same magnitude ballpark of like the lira to the dollar. So, we we all move up the stack towards sound money, but it takes just ages. It takes tons of pain. The human mind, we're just very resistant to change. And I just, you know, I use this framework. Bitcoin has done tremendously well. We've broken through so many barriers, right? We killed the ESG fund. We killed just so many things that Bitcoin has survived. We have ETFs now. Larry thinks one of the biggest marketers of it. We have we've punched through so many ceilings. And yet how many Bitcoiners have the exact same story of I can't convince more than a small handful of my friends or family to to buy this thing. I just can't get there. You know, and by the way, that's not a bearish thing. You know, Apple's famous for this whole line that you really only need a small number of crazy ones to change the world. And I do believe that that is where we're at. And you look at the you know, the archetypes of who a lot of Bitcoiners are. They're some of the most interesting people I've ever met in my life. I just one of the my personal bull cases given the set of Bitcoiners I've met through my journey, I cannot I cannot bet against them. They're just too smart. They've just got so many interesting life experiences. So, I do agree with Jeff's thesis. I just disagree that the world is going to accept salvation for want of a better term. They just want to take more Humans want more pain. And sorry, to be fair to Jeff, he does say this as well. Humans will vote for more pain. I think we have many decades of that part before we get to the other side of it. So, um he may be right, but I I do think that there's just a willingness of people to just deal with pain. I don't know why they do it, why we do it. It's just it's it's a societal >> thing. It's something I think about a lot, and I try to move more and more into the Bitcoin world, pay in Bitcoin when I can, spend and replace, so that I am living in the world I want to see. But then the next step is getting people to self-custody. That's another huge jump up, because >> thing. More people are in the ETFs, right? Well, that that and that's a big component of it, right? I've I've recently gone through like a mental exercise cuz like you know, as I get older, got a family, got to make sure that my self-custody setup is is safe safe, secure, all the rest of it. I've been in Bitcoin for coming up on 8 years. My job is Bitcoin. I spend every day thinking about this thing. I went through that process, and whilst I finally found the solution that works for me, right? That my family's going to be able to, you know, inherit and all that kind of thing. I went through that mental journey. I was like, this this doesn't scale. I'm sorry, guys. This just does not scale. This is a process. So, you know, there's and there's various ways we can solve this, but like the whole self-custody thing, I'm a tremendous advocate for it, but I'm also a realist. My mom's never ever ever going to work that out. Right? So, I I needed to make sure that I designed a system that mom would be able to solve, because she will never work that out. Dad will never work that out. You know, it it's a tricky one. So, the self-custody thing, I think all of this the technology, it will improve over time, but it'll be pretty slowly. And that is part and parcel with Bitcoin being a decentralized system. It doesn't have all the funding in the VC systems and the wallets, you know, the money available. Bitcoin is in a lot of ways a lot of Bitcoin development is through donations or sponsorships, those types of things. A lot of Bitcoiners will actually give back to the system via, you know, open sats or whatever other grant programs to improve the overall workability of the system, because it's in their own benefit. It's very much an altruistic system in that regard. It keeps it very healthy, but it means development is slow. You need to find the right person who wants to work on it, who has the skill sets, who can get paid for it, who probably won't make any money on the other side. It's a tough sell. It's it's open source as it gets. Um so, there are challenges, but, you know, very very smart people. They gravitate to it because it is a fascinating and difficult problem. And that's also why Bitcoin is so resilient, because it attracts people who want to be there. Uh it doesn't attract people who don't. Yeah, so it seems to be a very slow slow journey towards self-custody. And I mean, air-gapped wallets, which I was working with today, I don't know any of my friends, certainly not my family, who's who going to try that. I >> [clears throat] >> And I swear by it, right? I think they're great, but it it like for me, I'm super fan. However, when I think about the world around me, it gets more challenging. And that's just part of the design space, right? We just have to solve for it. So, yes, there are going to be uptake of I mean, we've always seen a big uptake of just like coins on exchanges, uh coins in ETFs. Those systems will also diversify, because like now that you're in the world of ETFs and big custodians, the insurance and all those things, they are going to go through like the banks will go through a tremendous design exercise to solve these problems. Now, it does create more risks, more centralized coins. You have to have the two and fro. The most important thing is that self-custody must always be an option, and we must always be making it easier and better. But it is unrealistic to expect everybody to do it. It is also the wrong approach to assume that nobody should do it. So, it's it's a it's an interesting world. Very similar to gold, honestly. You know, gold centralized for the most part. Um I love all the gold bugs who say, "Oh, well, when the power goes out, Bitcoin's dead." I'm like, "Oh, yeah? What proportion of your holdings are in ETFs?" And then they go quiet, because they know it's like 99%, right? They've got a couple of coins under their bed. And it's like even I had a debate with one silver bug where he was saying, "Oh, I went and bought my groceries with a silver coin during a power outage." I said, "Oh, yeah? How did the cashier know what the silver price was?" Radio silence, right? "You did have the internet, did you? Oh, cellular networks, right. Okay, so she And did she accept Sorry, did she accept the silver coin at $1 face value or the silver content?" Radio silence. It's all right? So, no one's accepting silver and gold coin. If if you're at that point in time where the power's out and like you need to barter for stuff, you will find me on the beach with a beer. That's where you'll find me. I'm not going to bother with like you need guns and canned food and all the rest of it. It's whatever. Not not not a base case. Q1. I like your approach, yeah. I think I'll be on the beach, too, cuz um yeah, I don't want to deal with the guns. Yeah. >> So, many people think that the Bitcoin 4-year cycle is over, but there are few like Matthew Mezinsky, I saw him on What Bitcoin Did say that it's still intact. What do What do you think? Yeah, so my my view on the 4-year cycle, I think truthfully, like honestly, I believe it's it's coincidental. The only driving factor that I can really assume is that there's a bunch of people who believe that it's going to happen, so therefore it's going to keep happening. My analogy to that is it's like when you throw a rock into a pond and you get the initial ripples, the first couple of ripples are perfect sine waves. The third and the fourth, they've got refraction, they kind of get interfered with other stuff, and then the fifth one, is it still a sine wave? No, it's you know, the amplitude changes, the waveform changes. So, I'm of the view that we're well into that phase. My view is the way I analyze markets, I do not take the 4-year cycle and say it must happen again. I do not insert that as a bias in my view that must happen. I look at it and go, "It's kind of interesting that it's playing out similarly, but that is not a reason to assume it's going to happen again. So, I I very much reject the idea that the bottom's going to happen in October, because we topped in October. It might. It it very well might, but it doesn't have to. So, my my framework is I'm looking for evidence of investor behavior. So, rather than say, "We're going to bottom 12 months after the low after the top, because we have to bottom after the top." My view is I'm we're going to bottom when investors put the bottom in. And that's what I look for. And what if it What if that happens in May? Or June? And if I'm waiting for October, I will stop I will stop allowing information that tells me something has changed to cross my radar, because I'm looking for that thing to happen that has to happen. So, to me, I think it inserts an unnecessary bias. I also cannot I cannot ex like give a a reason that I find convincing the miners aren't the driving factor. Some people want to talk about election cycles. It's like, "Okay, but there's a lot of election cycles." You know, and also, does it really matter what the election cycle is, given how much the global system is moving? Like everyone talks about a uniparty, and then they also blame the election cycles. It's like, you know, politicians spend money no matter what they're doing. So, I I don't find any of the arguments of this is the thing causing the 4-year cycle. And least of all, the 4-year cycle is the 4-year cycle because the 4-year cycle. It's like, okay, but just because you say four a bunch of times doesn't make the thing going to happen in perpetuity. So, that's my general view. Um I think it's interesting, it's coincidental. I think anchoring to it happening again just introduces like there's no basis for it. There's no there's no real driving factor for it. So, um I respect the views, but I just don't personally anchor to it as an important part of my my process. If you truly understand Bitcoin, you know why it's so important to be your own bank. Without full self-custody, you're trusting a third party that knows who you are and how much Bitcoin [music] you hold. Bitcoin is about eliminating counterparty risk. It's about self-sovereignty. The Bitcoin way is [music] the best way to learn the skills for this level of freedom. Their one-on-one approach teaches you how to [music] take self-custody without ever needing to know who you are or how big your stack is. Go to the Bitcoin way and book a free 30-minute consult. Don't delay. Your freedom is at stake. You mentioned your son, you became a dad recently. And you mentioned some of your self-custody goals have changed. Has anything else changed for you since you become a dad? The main thing that's changed for us is that we have actually stack as a business now. So, for my, you know, for many years, I think there's probably two things. One is I've gone through the world where I would get paid, I would pay my bills, and I would empty my bank account and just buy things. I did that for many years on my measly engineering salary in London and then my measly engineering salary back here in Australia. Um and through much of my glass no days, that was just how I how I rolled. So, I went through that as like a personal So, I've been there like, you know, sell your chairs Bitcoiner. Uh I then reached a point where you have a family, you have dependents, you have all those sorts of things. And uh certainly my mental mechanics have started to change where I became aware that I don't want my entire net worth. It's still a very large chunk of it. I don't want my entire net worth anchored to one asset. I I do need some I call it ballast, ballast to my portfolio. I started with precious metals, just getting some precious metals in my portfolio from like 2023, 2024 onwards. Um and that's been great because it has been a more stabilizing force in my portfolio because I'm now like I have to have a view to save for a house. And I think the big There's two things that changed. One is I've shifted from that like Bitcoin all-in type mentality to a Oh, hang on a second, now I have other things to worry about. Um as a father, your your costs go up as well. I work from home, right? This is office at home. It It's hard to actually have in Australia, finding a three-bedroom place, you're talking about multiple million dollars in terms of purchase price. Um which for Americans that take 70% of that, that's US dollars. It's well and truly above the any affordable pay level. Now, um the other major change is that the Check on Chain business, um we now have an opportunity to actually accumulate treasury assets in that as well. So, there's two of basically me and my two best friends um work at the business. It gives us an opportunity to actually collectively, so like an entity to collectively save. And Bitcoin is a core part of our treasury asset because all three of us have the same problem, which is we're chasing this unbelievable housing market that is so unaffordable. Now, there's a whole debate around how likely it is to continue and whether this oil shock could be the thing that finally just breaks its back. Uh that's a whole thing. But, at some point in time, the three of us are going to want to buy a home. And having that business entity as a tool, right? It's a tool to help the three of us collectively save for these this problem. Um which changes the way that I invest personally. I invest more cuz there's a whole level of tax that comes in this as well, right? You got to think about like the government taxes very heavily, especially income. So, are there ways where you can basically look for how do you optimize your savings, investing, business, right? And in many ways, I kind of come back to the It's like an old saying, right? You should have a third of your wealth in your business, a third of your wealth in precious metals, a third of your wealth in cash. Obviously, cash has gone to zero, so that's worthless. But, almost refactoring that third third pie chart and certainly understanding that the business is an asset. And if you invest in the business and get residual value in the business, um certainly like Check on Chain is a treasury company because Bitcoin is our primary treasury asset. But, what are we actually saving for? It's for the benefit of the three of us to get ahead. So, my mental framework has changed and evolved certainly on many fronts, but that's that's kind of a it's a part of maturation, right? Your your world gets more complex, it gets more expensive, but you have to be more clever about how you chase this thing because the housing market just keeps running. So, you've got to make long-term decisions and think about all the implications, all the tradeoffs. Um you know, it's it's a line that my accountant told me uh many years ago where he was like, you choice A, choice B, choice C. Eventually, you get to some kind of an a tax result. And a lot of people don't like the answer at the end of that tunnel, but you don't realize that the decision you made 5 years ago that's already made. You can't undo that. So, thinking it through everything on a long-term time horizon, even through the retirement, you know? Like I'm I'm fairly confident the Australian government's going to raid our retirement system, the 401k equivalent. Pretty sure that's going to happen cuz they're bankrupt. They're already tried to do it with unrealized capital gains. They're going to try and do stuff like this. So, I now need to be making decision A, B, and C with that as a risk and think about what else do I need to do to position myself accordingly. So, it's a yeah, it's it's a bit of a maze, but at the same time, it's you know, that's that's more or less what's changed in the last couple of years. So, that's very interesting that Australian government will most likely raid your retirement accounts. But, what happens if you have Bitcoin in self-custody? And would that also be unrealized capital gains? And do you think that Bitcoin is still the top asset over 10 years? Yeah, I do. Um so, for the unrealized capital gains thing, the thing with so, what we call it superannuation, but 401k is is more or less equivalent. Uh the thing is it is extremely highly highly regulated. If you have self-custody Bitcoin, and you can do that, by the way, it is possible. As I was just explaining there, I've got a lot of pans in the oven. Um I personally for my retirement account actually opted for the ETFs. Why? Self-custody is actually a whole thing, and it it is the one vehicle where I my my rationale was if they're going to raid it, I'm sorry, guys, if Bitcoin is not private. They know the UTXOs you have, and you are going to have to be proving it to them every single time if you spend them outside the rules, regulations, and everything else, you're cooked. If they want to tax unrealized gains, they know exactly when you bought it, how much it's worth, and how much they come for. So, you know, my view was the ETFs for me in that particular purpose that A, they diversify my custody, B, they simplify my estate planning, they simplify my life right now cuz my accounting is trivial. I don't have to spend any time on it whatsoever. I've got too many other things going on. And given how highly regulated they are, the risk of government raiding your superannuation is the same whether you have on-chain or ETF. In my opinion, yes, I take the self cut the counterparty risk, but that comes down to my choice of ETF, doesn't it? And then I can diversify that, too, um trivially. So, there was a number of benefits for me actually using the ETFs in the retirement account because of my view of that risk is when the government, if the government comes knocking, it doesn't matter if you have on-chain Bitcoin or anything else. You can say, "Oh, I lost the keys. I don't know." Well, if you say you lost the keys and you spend those coins ever, you have just committed fraud. So, I have one like one rule in life. The only entity that I will not get on the wrong side of is the taxman because it's just like it's how they get the kingpins, guys. Like they don't get them on their their murder charges, all right? They get them on tax. So, just don't mess with the taxman. So, that's my core view. So, I think for the superannuation fund, they'll come for it eventually. I don't think self-custody really gives you any benefit whatsoever in that scenario because it's just If Bitcoin was private, maybe. It's not. The benefit it would give you is if they come for the ETFs, like some people say they could co-opt the ETFs because that's the easy Bitcoin to get. That's the big amount. So, It's It's certainly possible, but I would also say that in that in that event, my non-ETF Bitcoin will more than hedge that risk. Yeah, it's it's a very interesting world we live in, and >> It's a shame we have to think about these things. I know. And I know some people could possibly go to another jurisdiction, but clearly you love your country. >> [laughter] >> Well, and and and that's the thing, right? Like it's not as if a lot of these problems aren't happening everywhere. You know what I mean? Like in order to go to America now, you have to give over your social media profiles and, you know, do bloody face scans and the whole lot. And and again, this is what airports have been for a long time, but there's a lot of prices to pay. Every country has different tradeoffs. Yes, Australia's got some real monkeys running the show, and they are highly highly ill-equipped for the world we're in, but I also kind of hope that a side effect of this whole Iran challenge is a bit of pain, and we now realize, ah actually we should be more bit more self-sovereign, and we should start building out these industries. We should actually have more oil and gas. I mean, Australia is full of natural resources. We should be a superpower in the nuclear world because we have more uranium than Saudi Arabia has energy has oil. We should be a superpower on all this stuff. And I whilst I don't think it will happen, I hope it will happen. I think that there's just so much value in this country that we we should fix it, right? We should actually push towards a better goal. I'm not someone to walk away from something. And at the other side of the equation, it's very safe here. We have good beaches. It's a nice place. Like yeah, it's more expensive, but also wages are fine. Like it generally speaking, Australia is one of like I I say this to anyone who complains about Australia, there are approximately 8 billion people who would prefer to live here. If you really gave them the choice and put them down here for 6 months, uh I know this because I worked in London um as as an engineer, and the company I worked for had a great exchange program where they move engineers around the world to actually experience different parts, you know, different jobs, all the rest of it. Australians would regularly go over to London, which was the head office, the biggest office in the in the firm. Thank you 2 years, that was fantastic, great time. See you later. That was me. The people who come over from London to Australia go to either Bondi or Manly, and they get permanent residency, and they never go home. It's a one-way street for a lot of people because it is the lucky country. We just have a bunch of muppets running the show. But, that doesn't mean we can't get rid of the muppets, right? Now, I'm not saying that politics will be solved, but I do think that we have just so many more benefits that are unrealized, and a bit of pain sometimes is the thing that just turns the wheels and gets people thinking straight again. Well, I hope for that, James. I really appreciate you being here today. Tell us where people can find you, and I will put links below. Yes, you'll find us over at uh checkonchain.com. Uh you'll find our charting website, which is pretty much my bread and butter tool. Um and our newsletter we do two written and video posts every week. So, trying to explore all these dynamics, um market updates and you know, quantum or whatever the latest thing is. Uh it's good where I share my thoughts on uh what's happening. Yeah, and I highly recommend your newsletter. It's really helped me a lot understand markets, and that actually makes me more calm when I understand. That's literally exactly the thing that I uh I target. So, that that's great to hear. Thanks, Paula. Thank you. >> [music]