The Dollar Changed. Bitcoin Is the Endgame | Matt Dines

**Matt Dines** (0:02)
We're moving from an era of Fed dominance and Treasury subservience to an era of United States Treasury dominance. What we're doing away with is this forward guidance mumbo jumbo. What it really is, is backstop, it's ammunition for the Fed to do all of the things we talked about, QE, ZERP. The game has changed, it's very clear.
All of the players who, you know, were cooperating around this old business deal, you know, that lasted for 75, 80 years. They're now, like, maybe it's too far to say they're at war with each other, but they're not seeing eye to eye, and they're definitely not cooperating anymore. Capital markets are war by another means. So when we say nothing stops this train, right? It's like, well, there's another train, and it's like, you know, that's what Scott Besson represents, all of that. So we'll see how this plays out.

**Danny Knowles** (0:59)
Matt Dines, good to see you, man. It's early in the morning here in Australia, and I woke up to a bit of a bloodbath in Bitcoin, and stretch is down another nearly 8% today. What on earth has happened overnight?

**Matt Dines** (1:13)
It's not too bad in Bitcoin yet, but we're fighting the downtrend of a bear market and the Bitcoin dollar FX rate. Stretch and the perpetual preferreds, this is a long story. I think it touches on the bigger picture that we'll talk about as this conversation goes on. But there's massive change going on in the dollar at the structural level. If you think about America, we're about to be 250 years old.
We've gone through several iterations of the dollar, right? And when we say the US dollar, it's meant different things structurally, like at least four or five key different ones over the course of this great nation's short history. I'm American, so I'll show that bias, right? Just to wear it on my sleeve.
But in my framework, we just went through a big one. 2022 was a key acceleration. And I think a lot of us are still operating under, let's say, the offshore dollar or euro dollar, or some of us in the Bitcoin space, the influencers, they call it the petrodollar standard, right? I'll stick to the term offshore dollar. But big inflection going on, and there's a major transition. And this is one of the most important ones, I think, we've seen in American history. All right, so we'll start there. All right, stretch. If you think about all credit in the world, and we'll talk about this offshore dollar credit bubble, the whole strategy is built on, we access dollar credit capital in the US brokerage, like the stock market liquidity pool.
So we tap dollars in these perpetual preferred instruments at let's say 11, 12, 13%. That's a liability. That's how we source dollars. I'm saying we, it's not me, I'm not doing this, but just whatever, royal we. And then we go long on the asset side, Bitcoin, right? And so if you think about the strategy as a dollar strategy, just turn it on its head. They've been the upside down of the Netflix show Stranger Things, right? It's not a Bitcoin strategy. Think about it as a dollar strategy. You're tapping onshore dollar liquidity at 11 to 13% with these perpetual preferreds. And then you go long dollar liquidity in Bitcoin, which is, it's a global market, right? Bitcoin trades, spot market, every nation state has their exchange.
But largely, if you look, go to one of these websites, CoinMarketCap, whatever, I think something stands out here. Obviously, the dollar is the biggest liquidity pair and the Bitcoin to dollar FX rate. But very few exchanges actually support a bank deposit dollar, like an onshore federal reserve regulated or a similar United States regulated financials. It's all Tether or Circle or whatever.
So the main liquidity pair is actually Bitcoin to offshore Tether dollar liquidity. All right. So just think about it that way. It's really built around that infrastructure. You're sourcing liquidity onshore and then your long Bitcoin dollar liquidity in this offshore pool. Now, we had a massive act of Congress in the US last year, the Genius Act. Besides this one big beautiful bill, it's the most consequential piece of legislation that's come out of this 200 and, I think it's the 225th Congress. I can't remember, just off by one, 226, 225, whatever.

**Danny Knowles** (4:54)
I know that.

**Matt Dines** (4:55)
Yeah, or thereabouts. It's like computer science, right? That you start at zero for indexing that off by one error. You get it, right? It's been the most consequential piece of legislation. And what I'm talking about here is Genius Act with the dollar stablecoin regulation, which what it technically did, and we'll talk about structure because the structural definition is key. It pulled in these stablecoins, which have been proliferating for over a decade. And it's a growing market, right? Over, I want to say 186, roughly billion dollars of tether circle has a lower market cap. It's not quite a trillion dollars yet, but let's just call it half a trillion, that type of ballpark for money supply of this new stablecoin dollar that is emerging.