Ten31 Timestamp: You're Gonna Need a Bigger Buyback

**John Arnold** (0:00)
Bitcoin!

**Marty Bent** (0:05)
Bitcoin.

**John Arnold** (0:06)
We can end it there.

**Marty Bent** (0:08)
That's it. That's all we have for this week. All we need to say.

**John Arnold** (0:13)
Frankie. Thank you, Frankie, for all your contributions.

**Marty Bent** (0:17)
What a weekend.
If you're watching this, as you may be able to tell, I'm on the road. I'm currently in Birmingham, Alabama, at an AI power summit gathering of the minds, if you will. Beautiful city, by the way. Walking around this morning. Incredible architecture. A lot of old, beautiful buildings. Birmingham, slept on. I'll say that. What's not being slept on right now, Bitcoin, currently charging towards $80,000. Last I checked, it was about $79,000 on the dot. Right now, it's right below it. $78,000, or excuse me, just went over, whole volatile, $79,020.
A lot going on over the last four days, and a lot of this pertains to what's going on outside of Bitcoin, a lot of which we've been talking about and discussing for the last six months. John, on that note, I'll throw it to you. How would you describe the setup right now?

**John Arnold** (1:06)
Well, you know, we did say in the last episode, after the months and months of Coiled Spring, Bitcoin usually aggressively moves either up or down. So we kind of basically told you what was going to happen. So I hope everyone acted on that very clear guidance. No, I mean, we were discussing before we went live, is it a bull trap or not? You know, I think you break up of 80K and it probably starts to look tougher to call it a bull trap. But, you know, I really, I don't know if there's a lot of profit in trying to call the direction. I think there are a lot of headlines that came out last week, which we'll discuss, that changed the setup interestingly and, you know, put it in, put this kind of moment in time in, I think, relatively unique context relative to prior cycles.
So if you go into my head, am I more bullish than bearish? Yeah, but I'm always more bullish than bearish on Bitcoin. So take that for what you will.

**Marty Bent** (2:03)
I am too. A permable, if you will. But seeped in theory and fundamental sound fundamentals, one of the fundamentals of Bitcoin, as Satoshi said in the early emails, is that governments and central banks cannot be trusted not to debase the fiat currencies. And it seems like we're reentering that here in the United States and not necessarily debasement of the currency, but a backstopping of treasury markets, which John, to your credit, for many months we've been following the development and the maturation of the AI theme. You made it very clear, abundantly clear, that this is a national security issue at the end of the day and the treasury will pull out all the stops to make sure that this moves forward in markets.
Don't get disturbed and freak out. And last week, August 19th, as you've had here, we had basically the starting gun for the Bitcoin run. I think Bitcoin reacted 45 minutes after this headline hit, but Treasury Secretary Scott Pesant came out and said that they were going to increase the size and nominal long end liquidity support. So buybacks from two billion per operation to at least four billion per operation. Not a lot nominally, but I think a bigger signal that we're here to backstop this market.

**John Arnold** (3:19)
Yeah. I mean, a ton to say on this.
I think to frame up the whole discussion, you're right. It's AI, but it's also a few other themes that we've talked about in the past that we're going to definitely have occasion to discuss more on this episode. But there are a lot of nationally strategic important things, or things that are at least believed and perceived to be of strategic importance to the current administration in the air right now. The plane is kind of on fire and we are trying to gracefully land it. And so I think there's not going to be, the current admin is not going to go down without a fight on dealing with all those things and try to optimize from all at the same time. I think this is an interesting development for a variety of reasons. I mean, number one, you said the headline here is Treasury doubles buyback support starting next month. And that's factually true. But we're also talking about going from 2 billion to 4 billion per monthly operation here of a program that's already kind of been up and running. You think about relative to the size of monthly or quarterly auctions, I guess, for the longer end, monthly auctions for the shorter end, the size of those, the size of the outstanding and the US debt burden. Interesting to see that this got so many feathers ruffled and got the debasement trade moving so hard on just what is ultimately not only a very small amount of buyback increase. That's number one. Number two, and we don't have a chart on this, but I think this happened and yields on the long end came down by 10 or 15 basis points immediately.