Can AI Actually Grow America Out of Its Debt? | Jeff Ross

**Jeff Ross** (0:02)
What's good for government isn't necessarily good for people. We don't like seeing our grocery bill go up to unaffordable levels like it is right now, or restaurants, or gas, or whatever. We want to see prices come down over time. That's actually awesome. That's why we're such huge proponents of Bitcoin. You want to have scarce money because it makes an abundance in the rest of the things that we want to buy with that money. I think AI is officially too big to fail. We're going to be entering a period similar to kind of like 1998 to 2000 where we just have a huge boom, AI led manufacturing renaissance in the US. I'm just very bullish on our economy in general. You just can't stop this movement. And so I think this whole decentralization movement can't be stopped. It can be ugly or it can be kind of beautiful. There are no rules. So it looks like from a technical standpoint that the bottom is already in. I think most people were going to be surprised, not to the downside this time, but actually to the upside, which will be the opposite of 2025

**Danny Knowles** (0:58)
All right, let's get into it, Jeff.
Awesome to see you. We've got a lot to talk about today.
I actually want to start on how different this bear market has been, because I think it's really important to highlight, because a 50% drawdown, while it doesn't sound hugely different to an 80% drawdown, is massive. Like the difference is, essentially, if you have an 80% drawdown from highs, you're getting your net worth cut in half and then cut in half again. And then getting back to all time highs, instead, with a 50% drawdown, you need 100% gain. With an 80%, you need a 400% gain. So the difference is ginormous, even though it doesn't sound that different. How do you think this has changed the structure of the market going forward from here, if we have actually hit the bottom?

**Jeff Ross** (1:41)
Yeah. Well, first of all, it's really good to see you, Danny. Thanks for having me back on your show.

**Danny Knowles** (1:45)
Of course. Anytime, man.

**Jeff Ross** (1:48)
Yeah. I don't do many of these anymore, so it's really fun to get to chat with you.
You know, so backing up to like early 2025, people would ask me back then, I don't know if we talked about that, but they would be like, well, what do you expect the next bear market to be like? And I said, I would always say, well, it really depends on what the bull market is like. Depends if we have a huge blow off top, which I was expecting and I was wrong. We did not get a huge blow off top and we've probably talked about that to death why that didn't happen. But it depends. So if you have an exponential rise higher, you almost always get that hockey stick straight back down lower and it's brutal, and it's fast, and it's painful, and it just destroys people. And it basically, it's all the leverage that was built up on the way up has to get de-leveraged on the way down. So you get that leveraged long liquidation cascade, LLLC.
And so what I was saying is, if we get that huge blow off top, we're going to get another terrible bear market. So we didn't get that this time, right? Everybody was disappointed that all we had was a little hump higher up to about 126, 126,000 for Bitcoin, and then a rollover. And so it makes sense to me because we didn't get the exponential move higher, we didn't get that huge drawdown. So this 50 to 55 percent bear market, that feels about right to me. And what does that mean going forward was your original question? It depends on what Bitcoin does going forward. So if we now have just a grinding bull market higher from here, which I basically expect, I think we're going to have lots of up and downs along the way. But I think we're headed higher for sure. And if we have just a slow grind higher where the total market capitalization of the Bitcoin network increases significantly, say, 200, 300, 400, 500 percent or so from here, and we go right now we're about 1.5 trillion market cap. Say we go up to 5 trillion or maybe we get up even to 10 trillion, that would be fantastic. I don't expect that, but it's possible.
It just depends how much leverage is built up and how much enthusiasm is built up along the way.
And then as we get to that higher levels of market capitalization, it just becomes less and less likely that we're going to have these huge drawdowns going forward. So if we do get a massive blow up, say in 2028, just pick a number. 2028, we have a huge blow off top and Bitcoin spikes to a million, and it does hockey sticks higher. I would say look out below, we're probably going to have a pretty painful bear market. We might drop more than 50 We might even break the record of this last bear market that we just got through. It may go down 60 percent, 70 percent or something like that. But if it creeps higher and we only have a little bit of a blow off top, then I would expect that we're probably only going to see a 40 or 50 percent ish drawdown. For me as a fund manager, that matters a lot.