The Macro Shift That Could Send Bitcoin to $500K | Matt Cole

Matt Cole (0:02)

They're going to buy back bonds, they're going to try to effectively reduce the debt load by making the currency less valuable. You actually have the president and the treasury working for Bitcoin, because they're working for a weaker dollar, and that's one of the strongest determinants of where Bitcoin goes. We actually think that over the course of the next, call it three to seven years, that we will see the biggest decline in the value of the dollar as measured through the DXY index in Bitcoin's history. Sometime, I would say in the next 18 months, you see real meaningful intervention. You see the dollar become the release valve explicitly.

It's hard for me not to think that this Bitcoin bull market that I think we will be entering into over the course of the next 18 months will be substantially better than the one we saw in 2024, 2025

Danny Knowles (0:51)

When you hear this, it makes me want to literally go on my phone right now and buy more Bitcoin. We've been talking about doing this for a long time, man.

Matt Cole (0:59)

I know it's been way too long.

Danny Knowles (1:01)

I'm glad to have you on the show.

There's so much to talk about. I want to get into a lot of things with you, but I don't actually normally do this, but I'd be interested. I want to get into your background a little bit because I've read a little bit about it. But tell everyone where you came from before you were in Bitcoin.

Matt Cole (1:16)

I came from traditional finance. You could say I was a suit, but I actually never wore a suit at my old job, but I do wear a suit now that I'm on a Bitcoin company at times.

Danny Knowles (1:26)

And an orange tie.

Matt Cole (1:27)

Actually, I usually go blue tie. I feel like the orange tie doesn't work for me.

So I think I've rocked it one time and then I put it in the closet. But I came from the largest pension fund in America.

My parents, they were law enforcement officers. They had their pensions tied to CalPERS. And so when I graduated college, it was at the start of the great financial crisis. And what you saw across the world, but I'm obviously in America, was pension funds became underfunded. And growing up in Northern California, I saw the pension fund of my parents, my other family members, a lot of friends become underfunded. And so it was a very personal mission to go there and try to fix the underfunded pension crisis. And in a sense, a very similar thought process to Strive is how do we maximize total returns at this pension, fix the underfunded pension crisis, and eventually got a job in the fixed income unit there, which is for people that maybe aren't familiar with institutional investing in fixed income versus equities, fixed income units within institutional investments are usually where active management is most likely to occur. So more active risk taking, a lot of things similar but in a different context to what we would talk about now in a Bitcoin strategy.

And so I rose up there. I rose up to be their youngest portfolio manager and managed about $70 billion.

About half of that was structured products, which is to structured finance, which is what I view our company today to be is to be a structured finance company. The other half was US treasuries. So it wasn't exactly 50-50, but let's just call it $35 billion of in each bucket that I was actively managing. And the treasury bucket was what was important for the Bitcoin journey. Because obviously in the United States, in the world, there is a debt crisis. I think one of the most important drivers of Bitcoin's success is the debasement trade of fiat currencies. And as I was talking to the Treasury and the Fed before I was a Bitcoiner, it just became so clear there was no fixing this debt crisis. There was no stopping the train. Name your analogy that you want to use. But whether you're a Republican or a Democrat in the United States, you cannot get elected on a fiscal conservative agenda. You just can't do it. And so the incentives in DC and incentives matter a lot and matter a lot in our space as well. Incentives drive behavior and the incentives were just bad. And so when you would ask the tough questions, there was no answer.

And so it just became clear as a large investor that it became very, I would say, unsatisfying to work in fixed income into a debt crisis. That when I first took the job, I didn't really realize what I was walking into, but it became a challenge at the company. There was other challenges around mandates that I didn't like, and politicization, working for effectively a government entity and a pension. So I ended up leaving and going to Strive, but that treasury process and managing the large treasury portfolio ultimately led me to Bitcoin after rejecting it for several years. In late 2016, early 2017, I put pretty much my entire net worth into Bitcoin. It gave me financial freedom. Oh, no, of course. Yeah, and I was the only Bitcoiner on both the fixed income and the equity desk at CalPERS. And like one of us, you talk about Bitcoin, and everybody thought it was crazy, but they actually would listen. So I would show them me buying Bitcoin, and it just was fascinating in 2017 to be showing people that. And a lot of debate. Late in my career there, I actually looked into Bitcoin for the pension, like how do you maximize risk-adjusted returns if you were to add Bitcoin? I think their view at the time was that it was too small of an asset when you manage half a trillion dollars. Just the, even now today, with Bitcoin under a $2 trillion market cap, for an allocation at a pension fund that's now getting close to a trillion dollars, they would probably want to see Bitcoin even bigger. And so that's where the bigger it gets, it actually does make it more likely for some of these institutions to adopt risk in that direction.