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And we think it will be the biggest because those are three very very big ideas. Very big ideas. And we're in print saying base case mid700,000 bold case 1.5. We still think that Bitcoin is three revolutions in one. The first is it introduced technology native to the internet and a currency native to the internet which we did not have.
And why didn't we have it before? We didn't have it because in the early '9s when uh the uh developers of the internet were again coding no one knew that financial services and commerce would take place on the internet. So there was no layer built in to facilitate it. Uh now there is so that technology revolution it's a global monetary system so first digital private no government oversight rules-based critically important mathematically metered to stop at 21 million units guaranteeing longerterm purchasing power and wealth creation in a way that fiat currencies do not.
The reason uh that we have had this winter is first something called the flash crash in October, October 10th of last year when Binance there was a software glitch and uh something called auto deleveraging happened where if a hedge fund uh or a DeFi company was operating on two exchanges, one where he or she had the long and the other where he or she had the short sort of to be perfectly hedged.
What happened during auto deleveraging is on Binance the software glitch caused an auto deleveraging. So they were they ended being completely offsides and uh I think it cost it depends there a range of estimates from 15 to30 billion in damage. And then the third thing that happened was AI. AI was taking all of the oxygen out of the room and Bitcoin miners were leading the way.
They were shifting from mining Bitcoin to facilitating data centers with their power. Right? Uh so those three things happened over the last year. I think we're bottoming out. The one thing that has taken a little bit of luster from Bitcoin in terms of fundamentals are stable coins. And yet, if you're a Bitcoin OG, you have that here.
OG. Okay, good. Good. First time I ever heard that, by the way, was uh when I was doing a podcast, uh Tasha and I were doing a podcast with Elon Musk and used the word OG. And I looked at Tasha, what's that? So, I'm expert now. Anyway, so even the Bitcoin OGs are saying, "Okay, we get stable coins." Because in emerging markets, they're living hand-to-mouth.
Uh they're so worried about their currencies destroying their purchasing power, destroying their wealth. They can't afford the volatility of Bitcoin. So, this is an interim step. But they say over time, these people will recognize that Bitcoin is better than the dollar. What kills us is when unit growth slows down.
Electric vehicles for example, they got hit hard, right? Supply chain issues and that slowed them up quite significantly. Rising rates, rates up 22 or 24fold never had happened before and that exacerbated the supply chain issues. So normally we can withstand rising rates uh skyrocketing rates. No one.
It's rougher. I mean, the mag six did fine. Uh rougher to go through that. I don't think we're going to see that again. First of all, hopefully CO won't happen again. But even if it does, the reason rates had to go up so much was because governments around the world at the same time had thrown as much as they could at it both from a fiscal and a monetary point of view.
And it caused a lot of problems. They probably won't do that again. felt as crazy as this feels right now. But this is the real deal. The seeds were planted back then. They weren't ready to ger to to flourish. They've been germinating for 25 years. We didn't get the cloud until ' 06. We didn't get the first big breakthrough in AI until 2012, deep learning.
Second big breakthrough, transformer architecture 2017, large language models, all of that. We needed 20 years for it to happen almost and now we're ready to go. And think about that. What I've just described is 25 years of the rubber band stretching. What happened was he turned around and having built a data center for the equivalent of estimates vary but 25 to30 billion per gawatt.
He turned around as he was not using it anymore and sold to uh I think it was anthropic. Yes, it was anthropic. Turned around and sold it for $34 billion per year per gigawatt when it cost. So you get, you know, more than 100% return on your money uh in year one. And then Google came along and paid $50 billion per gigawatt.
So we are in such early stages. The demand is so huge. The returns are so huge. This is second was quantum computing. Quantum computing many people think that the juiciest target out there is Bitcoin. And the reason it is it's cryptographic and Satoshi's uh coins are there. We don't know if Satoshi is is a group or a person.
Uh but that group or person has not moved those coins since inception. So they're kind of sitting ducks. Uh they haven't move their wallets and to more quantum resistant. And of course there are a lot of lost Bitcoin out there. So big juicy target. The more work we do on quantum though, this is going to take years and years and years.
Now AI research is accelerating progress but not by that much. Um just to give you a sense they're they're working right now with a 100 cubits at a time. That's the max. We need hundreds of thousands of cubits to crack the code so to speak. It's not going to happen for a long time. Think it's going to be really important to a gentic commerce.
But as we learn from companies like Cloudflare, Cloudflare is saying in order to accommodate uh agentic commerce, agentic payments, we are going to need a an ecosystem, a blockchain that is enables 20 to 100 million transactions per second. So that that's microtransactions as agents talk to each other and do deals with each other in micro you know micro denominations right so one 1,000th one 1 millionth of a dollar that that sort of thing uh so cloudflare Matthew Prince CEO is saying we need 20 to 100 million well uh what we're seeing is if Visa a traditional payments ecosystem 20,000 payments per second
think about that and he's saying 20 million to 100 million Ethereum and Salana very slow throughput. So what does the data actually show us? When we dissect ARC's $1.5 million model, over 80% of the projected upside relies on two assumptions. That nation states adopt Bitcoin as a reserve asset and that institutional money managers allocate at least 2.5% of global investable wealth into spot ETFs.
But look at the emerging markets. Kathy Wood points to citizens fleeing currency debasement in Argentina, Nigeria, or Turkey aren't buying volatile Bitcoin to protect their day-to-day survival. They are holding US dollar stable coins. Meanwhile, central banks are managing the highest sovereign debt loads in modern history.
If liquidity expands, Bitcoin acts as the ultimate high beta canary in the coal mine. But if volatility continues to trigger algorithmic cascades on offshore exchanges, institutional risk committees will keep their exposure capped. Kathy Wood sees a 25-year coiled spring ready to release. But whether that release drives Bitcoin to seven figures depends on one variable, global liquidity. Thanks for watching and I will see you in the next
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