Guest
Matthew Mezinskis
#804: Bitcoin Is Cheap And Nobody Believes It with Matthew Mežinskis
- Bitcoin is trading near the 8th percentile of its 17-year power law trend, similar to price levels in mid-2022 and summer 2015, suggesting historically cheap valuations despite recent consolidation. - Bitcoin priced in gold has strengthened dramatically; it now takes 20 ounces of gold to buy one Bitcoin versus 12–13 ounces in February, indicating a much stronger power curve for Bitcoin than for gold. - The Fed's balance sheet is expanding again (similar to 2019), raising questions about whether a Black Swan event will force monetization or whether yields and debt servicing will become untenable for borrowers. - China's yuan has replaced the US dollar as the largest monetary base globally at $6 trillion, though its growth is hampered by the country's fastest-growing debt load among developing nations. - Stablecoin market cap (~$250 billion) is a rounding error next to global M3 broad money (~$150 trillion), yet stable coins as offshore money market funds may shape future financial infrastructure. - Russia's economy and governance remain severely degraded; sanitation, living standards, and rule of law lag all peer nations, undercutting any geopolitical narrative favoring Moscow.
Is The Bitcoin Power Law Broken? | Matthew Mezinskis
- Power law vs. exponential growth: Bitcoin follows a power law (declining growth rate, currently ~40% annually) rather than exponential growth. This is distinct from traditional financial assets and the stock market, which exhibit exponential trends driven by fixed interest rates. - Four-year cycle remains intact: Despite price dipping below the power law trend, historical data shows cycles have repeated roughly every four years. The current downturn (~53% decline) is shallower than previous bear markets (77–85%), and only nine months in. - 2029 price projections: If the power law and four-year cycle hold, November 2029 could see Bitcoin reach a median of ~$365,000, with Q90 around $500,000 and theoretical upside to $1 million (Q100). - Coming financial system collision: By the 2030s–2040s, Bitcoin's slowing power-law growth will converge with the stock market's accelerating exponential growth. This collision may force a choice: Bitcoin either gets co-opted into an exponential asset (with trade-offs like reduced self-custody optionality) or fundamentally reshapes finance toward power-based credit models. - Mining as structural shock: Every four-year halving, while nominally reducing subsidy, will remain economically significant—potentially worth hundreds of billions by 2045. Dismissing mining's importance ignores monetary history and Satoshi's deliberate design. - Statistical value now: Relative to the power law, Bitcoin is currently at deep-value territory—worse sentiment than 2022, but statistically cheaper than at any prior bear-market bottom.
The Four Year Cycle Is Not Broken | Matthew Mezinskis
- Bitcoin's power law shows the asset grows proportionally to itself over time, with price doubling roughly every 13% increase in Bitcoin's lifespan—fundamentally different from exponential growth models used for stocks and traditional finance. - Quantile regression analysis suggests Bitcoin at $63,000 is statistically scraping the absolute bottom relative to the power curve, with minimal room to go lower before breaking historical precedent. - The four-year cycle remains completely intact despite widespread claims it was broken; 2024–2025 price action follows prior cycles, with rapid descent to bottom mirroring 2017–2018 and 2021–2022 patterns. - Bitcoin's power law projects a price target of **$550,000 by 2029–2030**, with high statistical confidence, though this reflects the trend rather than a guarantee. - Fed balance sheet contraction (from $9 trillion to $6.5 trillion) did not prevent Bitcoin appreciation, contradicting the narrative that central bank printing is required for Bitcoin gains. - Long-term holders in loss vs. profit metrics show deeper red zones emerging, signaling capitulation and multi-year accumulation phases typical of four-year cycles.
Bitcoin Power Law: The End of Exponential Growth | Matthew Mezinskis
- Bitcoin grows on a **power curve** (proportional, sustainable growth) rather than exponential growth like traditional finance; this means its annual growth rate declines over time as the network scales. - Power curves exhibit straight-line relationships on log-log charts, whereas exponential systems (TradFi, bonds, stocks, credit-based instruments) show straight lines on log-linear charts—a fundamental structural difference. - Bitcoin's doubling time increases proportionally with network age; early Bitcoin doubled every ~7 days, now approximately every ~700 days (two years)—contrasting sharply with exponential systems that double at fixed intervals. - The jury remains open on whether Bitcoin will be pulled into TradFi's exponential model or eventually pull TradFi toward Bitcoin's power law; credit-based lending cannot work sustainably on power curves because interest requires constant compounding. - Bitcoin priced in gold ounces is near historical lows (~25.39 oz vs. trend of 63 oz), suggesting potential rotation from gold back to Bitcoin despite recent gold strength. - AI and top tech stocks are currently growing at 41% CAGR—matching gold's recent pace—but face mean reversion pressure; market caps would need to reach ~$35 trillion to exceed prior records, suggesting a potential boom-bust cycle ahead.
Is the Fed Losing Control? W/ Matthew Mezinskis
- Fractional reserve banking is not inherently dangerous; the problem is central banking's monopoly on money creation, which enables uncontrolled monetary expansion beyond what free markets would allow. - Bitcoin functions as base money (core settlement layer), analogous to gold or central bank reserves, not as bank deposits or broad money circulating in the financial system. - The Federal Reserve's control of monetary policy creates systemic risk; historically, competitive banking systems without central banks operated fractional reserve models without crisis, but central intervention distorts equilibrium. - Foreign holdings of US Treasury debt have declined to 23%, while American ownership has surged to 60%, creating dependency on domestic demand and increasing likelihood of future Fed bond purchases and money printing. - Bitcoin follows a power law growth curve (proportional growth tied to network adoption) rather than exponential growth; this predicts Bitcoin reaching price parity with global base money (~$2M) around 2036–2038. - Global monetary base currently stands at ~$44 trillion (fiat, gold, and silver); Bitcoin's $2 trillion market cap represents ~4.4% dominance and continues growing at ~42% annually while fiat grows at ~7–8%.
#289: Bitcoin is about to surpass the British Pound with Matthew Mežinskis
- Bitcoin ranks sixth largest base money globally, with Q3 2021 update showing it approaches the British pound (£1 trillion) and could surpass it in Q4 2021 at ~$68,000 USD. - Global monetary base grew 12.8% annually since 1970, doubling every 5.7 years; 30% of all cash ever printed occurred in the last two years due to COVID stimulus. - Central banks remain opaque despite claims of transparency—the Bank of England discloses only 90% of its balance sheet by value, making Bitcoin's fully transparent ledger a stark contrast. - Compound annual growth rates reveal weaker fiat currencies (Australia +184% YoY, Canada previously +300%) experiencing rapid devaluation while Bitcoin's supply growth has slowed to 1.8% YoY post-halving. - Rising authoritarianism and monetary debasement across multiple currencies (Turkey 44.5% annually, Argentina/Brazil >100%, Lebanon in hyperinflation) illustrate why Bitcoin offers a non-debasable alternative. - Supply-side analysis of monetary bases avoids the political manipulation of CPI indices and reveals empirical evidence of currency devaluation that demand-focused metrics cannot capture.
#268: Q2 Global Monetary Base Update with Matthew Mežinskis
- Matthew Mežinskis presented Crypto Voices' Q2 2021 Global Monetary Base report, tracking the 30 largest floating currencies representing 94% of global GDP and 78% of global population. - Bitcoin ranks sixth among global base monies at approximately $900 billion, behind only the US dollar, euro, Chinese yuan, Japanese yen, and British pound. - Global monetary base expanded from under $20 trillion in late 2019 to $28.8 trillion by Q2 2021—a 50% increase in two years—with blended annual growth averaging 13%, roughly six times the stated 2% inflation targets of major central banks. - Bitcoin's supply inflation rate in 2021 fell to approximately 1.7% annually, converging with historical gold inflation of 1.8%, marking a shift toward predictable monetary policy. - The repo market dysfunction in September 2019 and subsequent reverse-repo accumulation (reaching $1.2–1.3 trillion) signal excess liquidity and leverage concentration among five major US banks controlling 80–90% of reserves. - Stablecoins (USDT, USDC, etc.) are outpacing central bank digital currency (CBDC) adoption and will likely remain the dominant form of tokenized dollars, particularly in emerging markets.
#250: Q1 Monetary Base Update, inflation, and haters with Matthew Mežinskis
- Matthew Mežinskis released Q1 2021 global monetary base update, tracking 30 floating currencies and comparing Bitcoin to base money rather than broader money supply or gold. - Critics including Francis Coppola and Joe Eisenthal misunderstand how central bank balance sheets work, conflating treasuries (assets) with reserves (liabilities) and rejecting Japan's inclusion without substantive argument. - The U.S. monetary base grew 12.1% annually from 2000–2021 while GDP grew only 3.7%, meaning one dollar of base money produced $17 of GDP in 2000 versus $3.61 in 2021—a stark productivity decline. - The Federal Reserve abolished reserve ratios in March 2020 to accommodate massive stimulus and treasury deposits, enabling unlimited money creation without traditional banking constraints. - Inflation metrics (CPI, PPI) are unreliable because individual consumption baskets differ; multiples like base money per GDP or per unemployment point are more tangible measures of monetary expansion. - Free banking advocates argue central banks cannot rationally set reserve ratios; competitive markets should determine money supply and banking structure.
#191: Matthew Mežinskis
- Q2 2020 global monetary base expanded at a record 50% annualized rate, the fastest pace since the modern central banking era began post-1971. - The distinction between **base money** (cash, coin, and bank reserves that settle final transactions) and claims on money (M1, M2, M3, deposits, loans) is critical when comparing Bitcoin's 21 million supply to fiat currency supplies. - Japanese yen holds the largest monetary base globally (~$5 trillion equivalent), not the US dollar, though dollar-denominated claims vastly exceed all other currencies in offshore and domestic use. - Central banks cannot be stopped from printing; they have monopoly control and will use any tool—buying corporate bonds, stocks, real estate—to manage crises and bail out cronies. - Corporate treasury allocation to Bitcoin (MicroStrategy's $500M move, smaller Canadian firms) signals a shift in board-level thinking and suggests demand for non-state-controlled assets may rise alongside monetary debasement. - Eastern European experience (Latvia, Belarus, Ukraine) demonstrates that socialist/communist economic policies destroy wealth and freedom regardless of race; the US risks repeating this mistake through ideological capture.
Tales from the Crypt #53: Matthew Mežinskis
- Base money versus fiduciary media: Bitcoin's 21 million supply should be compared to the ~$20 trillion global monetary base (physical cash plus bank reserves), not to M1 money supplies or other broader aggregates. - Free banking history demonstrates that layered payment systems (paper claims on gold reserves) worked efficiently in Canada (1867–1935), Scotland, and Sweden without central banks, maintaining sound money while enabling economic activity. - Lightning Network as settlement layer: Bitcoin at the protocol level serves as base money and settlement media, while Lightning Network functions as a trustless payment layer analogous to historical bank IOUs—a trade-off between security and transaction throughput. - Monetary policy decentralization: Bitcoin transfers monetary policy control from central banks to network participants (nodes, miners) who enforce protocol rules, giving individuals direct say in a system affecting half of every economic transaction. - Fiat irredeemability: Since 1971 (end of gold standard), government currencies have been completely inconvertible; central banks hold government bonds, not gold, and have unlimited license to print—the fundamental crux of the monopoly problem. - Eastern Europe currency crises (1990s): The dissolution of the Soviet Union and subsequent currency collapses in Russia and Latin America illustrated the vulnerability of centralized fiat systems and foreshadow why Bitcoin appeals to populations that have experienced monetary collapse.