00:00 Something strange is happening with Bitcoin behind the scenes. Whales, like Michael Saylor's Strategy, are selling Bitcoin now after years of indicating that that would never ever happen. You've got prominent Bitcoin voices like Jack Mallers who are stepping down as CEO of his Bitcoin treasury company, 21 Capital.
00:19 And you have Satsuma, which is a publicly traded Bitcoin treasury company trading on the London Stock Exchange, whose shareholders just voted to liquidate the company's entire Bitcoin treasury and return the capital to investors at a severe loss, by the way. So, I'm going to explain exactly what is happening right now, why it's happening, and most importantly, even though I think Bitcoin is more than likely to go much lower than it is from here, I'm still bullish on Bitcoin in the long term. I'll explain why.
00:46 So, first of all, we've got MicroStrategy. MicroStrategy is the big poster child for Bitcoin treasury company, and they used to trade all the way up at over $540 per share at their peak. Now, they're trading at about $100 per share. Crazy thing is, they're trading at $100 per share when they own more Bitcoin now than they did when they were trading at $500 per share.
01:08 But, the reason they were trading at such a high premium back then is mainly because of a short squeeze. Back in January of 2024, they were trading below book value and had a big short interest. And as the price of Bitcoin skyrocketed from there, those short sellers had to close out because the book value of MicroStrategy was worth so much more.
01:24 That created a classic short squeeze, skyrocketing the shares to above $500 per share briefly. But, as retail investors got wind of this, they thought, "You know what? Maybe everybody's buying this even though it costs way more than the amount of Bitcoin they actually hold. We're doing this because eventually those shares will own way more Bitcoin.
01:43 And so, we're doing this because of the future Bitcoin that it'll hold." But, obviously that story did not pan out because the only way to do that is to dilute the shareholders and issue way more shares, which is one of the reasons why price collapsed from there. But, the reason why the stock price collapsed recently is because the price of Bitcoin has collapsed recently.
02:01 It's down 50% from its high in October of last year. Hey, real quick, if you are an active investor and your portfolio is not growing as fast as you'd like, then I would like to give you a free gift. This is something I've been working on for a long time. My team and I put together a portfolio stress test.
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03:36 Now, MicroStrategy would have been completely fine if Michael Saylor would have just raised some cash, sat on the cash, and said, "Hey, you know what? In order to pay our debt payments, in order to pay our dividend payments, we're just going to use this cash. We can last three or four or five years. We don't have to raise any more money."
03:50 But, like a gambling addict that couldn't help himself, just decided to spend all those cash reserves that he raised on doubling down and buying more Bitcoin. And that has put him in the position now where he has to sell Bitcoin, even though he used to indicate in the past that that would never happen.
04:04 I don't think he ever outright said that they would never sell Bitcoin, but he definitely gave that impression. Now, for those of you who are unaware of why they would have to sell Bitcoin, it's because they don't make any money as a company. They raise money from new investors by issuing more common shares.
04:19 They raise money from investors by borrowing new debt, and they raise money from new investors by issuing preferred shares that pay a high dividend. All of that new money that they raised, they use a good chunk of that to buy more Bitcoin, and then they use some of that to make their debt payments and to pay dividends to existing shareholders.
04:35 If you're a shareholder of STRC, they're paying you 12% a month. STRD, 10%. STRK, 8%. STRF, 10%. And so, they are quite literally raising money from new investors in order to pay returns to existing investors. Now, if that sounds like a Ponzi scheme, it's because it's close. The reason why it doesn't quite count as a Ponzi scheme is because they're very above board and explicit with the fact that they don't make any money as a company.
04:59 They only pay dividends and pay their debt obligations as a result of raising new money from new investors. And for a lot of the preferreds, they can shut those dividends off at any time, but they can't shut off the debt payments. So, again, it's Ponzi-adjacent. The only way that they can continue to pay their obligations is if they can continue to raise money from new investors.
05:16 Well, they won't be able to continue to raise money from new investors if the price of Bitcoin keeps falling because that means that the price of MicroStrategy will keep on falling, and if they have to issue new shares and raise more money, they're going to be doing that into a falling share price, which could create a negative feedback loop, and that is exactly what has happened, which is why they are now forced to sell Bitcoin in order to cover their obligations.
05:36 But, it's not just MicroStrategy. Like I said at the beginning of the call, there's this publicly traded company Satsuma Technology, SATS, and you can see the price per share has collapsed since inception. This is a stock that's listed on the London Stock Exchange and recently shareholders have just had enough.
05:54 They said, "You know what? Sell all the Bitcoin, return the proceeds to shareholders." And it's going to be a big loss, mainly because the price of Bitcoin is down a lot from where the company purchased that Bitcoin. Add that with the fact that prominent voices like Jack Mallers are stepping down from CEO position as a company and it's not exactly clean cut.
06:11 We can see that this was a three-way crypto deal with Tether that was called off and then Mallers stepped down and he said that he resigned without severance, without pay. He gave up his stock options, but that wasn't exactly true. Cuz as you can see here, what he was paid in severance as part of that resignation agreement was a $50,000 cash payment plus a $420,000 cash payment plus a $1.
06:35 15 million cash payment plus 1 and 1/2 million vested stock options to purchase class A common stock that he may exercise during the 90-day period following his separation date. It actually looks like he got out pretty good. Now, all of this happening is leaving many Bitcoin holders wondering, is this the end of Bitcoin? Yeah, we've had the 4-year cycle in the past, but is that just is it over now? Especially considering over the last 6 to 12 months, we've continued to see news like this where OG Bitcoin whales who have held for years or longer are
07:05 now getting out, selling their Bitcoin, locking in massive, massive profits. Now, the thing is, all of these things are connected. The reason why so much money is selling and shorting the price of Bitcoin to get it to go lower is because there are Bitcoin Treasury companies that can be forced to liquidate.
07:22 It's to get everybody to capitulate and to get everybody to sell and to get the over-leveraged players who have a ton of Bitcoin like MicroStrategy, to get them to be forced to sell. Because if you can force liquidation of the major holders, the price gets shoved way lower and then you get to close out your shorts at a nice profit.
07:40 And the guys who have the money to do this, they're big money. This is Wall Street. This is trading desks. This is hedge funds. This is the plan. This is the purpose. Over the course of the last 6 to 12 months, slam Bitcoin as much as possible so that all of the other holders either choose to sell or are forced to sell.
08:01 Because if they do that, the price goes even lower, then I get to close out my shorts at a nice profit, and then I get to flip my position and pick up longs at a very, very steeply discounted price. And that is the plan. The reason why we know this is because everybody is now pushing for the Crypto Clarity Act to get passed very soon.
08:19 President Trump just told Congress to pass the Clarity Act. Coinbase CEO Brian Armstrong just went on CNBC and he said, "Time to get the Clarity Act across the finish line." Even Andrew Cuomo, the former governor of New York, he just backed Wall Street Crypto Alliance saying he's urging Congress to pass the Clarity Act.
08:38 And even the Treasury Secretary Scott Bessent is now signaling that the Clarity Act is on the Senate's 1-yard line. Within the last 1 to 2 weeks, everybody is now pushing hard to get this Clarity Act passed. So, what is a Clarity Act? The Clarity Act is the thing that will allow for institutional adoption.
08:57 No major Wall Street firm, no major finance firm, no major player wants to really touch Bitcoin, wants to touch crypto until they know what the rules are. You don't want to spend years and a ton of money investing into something just to get penalized or punished for it later or have the rules change and you have to undo a bunch of stuff and go in a different direction.
09:15 You want to know what the laws are, what the regulations are, what you can do, what you can't do, who's regulating who, where the rules are, so that you can move forward full steam ahead. They know there's a ton of money in this. They know there's a ton of profit to be made here.
09:29 The only reason they haven't done it is cuz there hasn't been a framework, a legal framework for them to move forward with confidence. And that is what the Clarity Act is going to do. It's going to allow a ton of institutional money and a ton more retail money into Bitcoin. Because to date, the main way to get money into Bitcoin is very different than the way the vast majority of Americans ever have invested.
09:50 The vast majority of Americans, when they invest, they go into their 401k, they choose a mutual fund, they log into their IRA, they choose an ETF, they log into their brokerage account, and they choose some stocks. The concept of just a Bitcoin wallet just requires a lot of education. But now, companies even like Charles Schwab and Fidelity, you're able to do this inside of your brokerage account.
10:12 You go to click place a trade, and instead of choosing stocks or ETFs, you can choose crypto. And that will be everywhere as a result of the Clarity Act. Which means that right on target, as the big players have been able to force the price of Bitcoin lower, get big players to liquidate, get companies like Satsuma Technology to liquidate their Bitcoin and shut down, get companies like MicroStrategy become force sellers and liquidate.
10:37 Again, they are force seller here. They would not be selling if they didn't have to. Then the price of Bitcoin goes as low as it possibly can, and then right when the Clarity Act comes in, everybody gets to flip and go long. They make money on the shorts, and they go long at a lower price and get to ride that thing back up high.
10:53 And the crazy part about this is all of this is happening right on schedule with the 4-year cycle. Bitcoin has a long history of something called the 4-year cycle, where Bitcoin tops and bottoms on a very predictable 4-year schedule. I'm going to flip this chart over to logarithmic so that you can see the prior moves much clearer. You can see Bitcoin topped in December of 2013, topped in December of 2017, topped in November of 2021, and topped in October of 2025.
11:23 All of these major tops were almost exactly 4 years apart. And then you can see about almost exactly 1 year later is when Bitcoin ends up bottoming. Bitcoin bottomed around December 2018, bottomed around December 2022, which means that zooming in on the recent price action, we would expect Bitcoin to bottom out sometime towards the end of this year, again, if this four-year cycle holds.
11:46 And then going from there, Bitcoin would have a really nice rally up until about September of 2029 in the next phase of its big bull market, which is why I am very bullish on Bitcoin for the long term here. I think the chances that Bitcoin moves substantially lower are very high from here in the near term over the next couple of months.
12:03 It fits with the Bitcoin bottoming cycle because according to the cycle, it still hasn't hit the time period in which it normally bottoms. It fits with what whales are doing, it fits with what traders are doing trying to get the price of Bitcoin to go lower so they can profit on their shorts, they can get everybody else to liquidate so they can scoop everything up at a way cheaper price.
12:21 And the people who are doing this are the ones who are going to benefit by the Clarity Act passing, which is probably going to happen within the next couple of months, marking the bottom. And then anybody who didn't sell or anybody who buys back in real quick after, assuming the timing is very predictable again, gets to ride that wave back up.
12:39 And so for me, I don't trade Bitcoin. I view all of this as an opportunity to just buy and take advantage of the volatility. In fact, I buy Bitcoin literally every single day. I dollar cost average. I personally like 5% of my portfolio allocation and 5% of my new investments into my overall portfolio to go into Bitcoin.
12:56 It's an asymmetric bet. That's why I choose 5%. Worst case scenario, which I think is actually the most likely scenario, is that it goes to zero and I lose 5% of my invested capital. But best case scenario, it becomes used as money in the future, it must go up many, many, many times more than what it's worth right now, which means it would have a substantially beneficial impact on my portfolio even if I'm only allocating 5%.
13:20 It can only go down 100%, it can go up 1,000, 5,000, 10,000%. So because of that asymmetry, I like about 5%. Obviously, you can choose whatever you want. And so I think everything happening with Bitcoin right now makes complete sense. All the whales, all the traders trying to get everybody else to liquidate so that they can scoop things up at the bottom right on time with that cycle, right on time with the Clarity Act passing right before a bunch of money starts rushing in passively into Bitcoin.
13:44 And as for the exact timing and how much it goes down, how much it goes up afterwards, we'll just have to wait and see. One last note, if you're an active investor and your portfolio is not growing as fast as you'd like, my team and I put together a completely free gift for you. It's called the portfolio stress test. All you have to do is answer some questions about your portfolio and your investing goals, and then it will email you a custom blueprint that will help you fix the vulnerabilities in your portfolio that you maybe didn't even know were there.
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14:23 The link is in the description below. Fill the questionnaire, plug in your information, I'll send you that custom blueprint, you can get started. As always, thank you so much for watching. Have a great day.