What's going on guys? Today I've got an excellent episode with Phil Rosen. He is the co-founder and editor-in-chief of Opening Bell Daily. In this conversation we talk about Bitcoin, the Federal Reserve, housing regulations, what's going on with home affordability, why you sitting at home have to become an investor, why savers are losers, and why the Federal Reserve is not actually in control but instead the market is telling the Fed what to do. This conversation covers a lot. I really hope that you guys enjoy this. Please let us know what you agree with, what you disagree with, and what questions you have for the next episode. Here's my latest conversation with Phil Rosen.
All right Phil, what's the first topic you got? So every single investor in the world is about to gain exposure to Bitcoin because MicroStrategy was just added to the NASDAQ 100, and that's QQQ, which pretty much every retirement account goes into. It's the most popular fund for passive investors. What did you make of this news?
Well, it's really just kind of an algorithmic decision that if MicroStrategy gets big enough and meets certain criteria, it gets included in the index. If it doesn't meet that criteria, then it won't be in the index. I do think that MicroStrategy has appreciated a lot, right? The market cap is much larger, obviously it qualifies to now be included. What is interesting to me is everyone is talking about it in terms of like, oh, now every investor is going to know that they're investing in Bitcoin. I don't think that most people could name 20 stocks in the NASDAQ 100. I don't think most people could name, you know, 50 stocks in the S&P 500. They're buying an index. They're just saying, hey, you guys are smarter than me, just give me the 100 stocks and that's what I want exposure to. What I do think is pretty interesting though is more so the impact on MicroStrategy more than the impact on the investor. So that persistent bid of, you know, tens of billions of dollars that be flowing towards MicroStrategy is a very big deal. And so it will continue to give Michael Saylor the ability to sell stock, buy more Bitcoin, Bitcoin goes up, sell more stock, and kind of play the game that he's playing. And so while it's a good narrative or a good story to talk about the fact that like now every investor's going to have exposure to Bitcoin, I think they're going in there like half a percent, right? Like sure, they kind of sort of have exposure, but I don't think, you know, 99% of the people that are holding NASDAQ 100 could tell you how, what's the percentage, or it's not like they're making an active decision, I'm going to go buy the NASDAQ 100 because MicroStrategy is in there. So passive indexes are more valuable to the company, I think, than a company is valuable to the people holding the index.
Yeah, I think that's a great point because even, you know, for us, we look at the market all day, so we might not, we think it's obvious that holy crap this is, you know, MicroStrategy being added, but most people wouldn't know or recognize that. One, so one analyst told me this improves how MicroStrategy is viewed from a credit perspective. So ratings agencies will say, okay, now they're more credible or legit of a company. So I think that impacts the cost of capital for what MicroStrategy can get in the market and just how the market perceives them to a degree.
Yes. He's unique in that he's had a pretty good cost of capital so far. Like he's been issuing 0% convertible notes that are converting at 55, 60% premiums to his current price. I'm not aware of anyone who's able to get better terms than that. So in a weird way, yes, getting into the NASDAQ 100 does improve credit rating and does improve kind of your position, if you will, kind of is like a stamp of validation in the traditional financial system. But actually Bitcoin gave him that already. And so it's like TradFi being like, oh, now we think that this is validating, right? But if you look at the market, the market determined that Bitcoin was more important than the NASDAQ 100 because having the underlying Bitcoin exposure gave him the ability to raise these converts at very, very attractive terms. And so if you go and you ask an analyst on Wall Street, they're like, oh, he's now in the NASDAQ 100, right? But if you go and you look at the convert market, actually they don't care. Like they've already been giving him, you know, pretty insane pricing terms because they're like, hey, what we want is not another company in the NASDAQ 100, what we want is we want a company that's got giving us exposure to Bitcoin. And so this is like a classic paradox of kind of traditional financial system and Bitcoin system meeting each other is that where the market clearing price has been is actually in favor of Bitcoin, but there's still a lot of people in the traditional system that they're waiting for these kind of traditional milestones to be hit. So there's some investor somewhere who didn't have exposure to MicroStrategy but now they're excited because like now they're in the NASDAQ 100. It doesn't matter though, right? In the grand scheme of things. And so again, I just go back to like if you look at all of the ramifications of this, you just zero in like what matters is that there's now a persistent bid from passive investors into MicroStrategy at a size and scale that they previously didn't have that will likely drive the price higher and also give him the ability to get more Bitcoin which will then drive his price higher. And so my expectation is that let's call it a half a percent or whatever allocation in the NASDAQ 100 will grow over time. And so one of the most interesting questions is, you know, at the end of 2025, what percentage of the NASDAQ 100 is MicroStrategy? I don't know, right? And I don't know if I necessarily have done enough work yet to have a strong opinion on it, but I do think that that question is going to tell you a lot about the NASDAQ 100, a lot about MicroStrategy, etc. And so if it's, you know, half a percent to 1%, okay fine. What if it's 5%? That'd be a pretty big jump, right? And so that's the type of stuff that is pretty interesting because now you're talking about relative comparisons to, you know, other companies that are in the index. And I think one piece of that too, if it gets to 5%, what does that do to the price of Bitcoin? And Bitcoin just hit $108,000 today as we're recording, and pretty much it's hit a new high every week since the election and sometimes multiple times a week.
Seven weeks in a row, yeah, greatest winning streak since 2021. What has changed in this week versus the week before, if anything? Have you noticed any new drivers or maybe it's just MicroStrategy? I'm not sure.
Well, I think last week or the week before, Paul Atkins being named as the SEC chair is a pretty big deal. People realize, hey, you know, kind of Trump is following through with his pro-Bitcoin, pro-crypto stance. Atkins seems to be, you know, kind of a good tailwind. You also see Howard Lutnick being named the Secretary of Commerce. I think that's a big deal. He's obviously very pro-Bitcoin and crypto. Scott Bessent, he's been coming in as Treasury Secretary, that's obviously very pro-Bitcoin, pro-crypto. And so, you know, you're kind of putting the puzzle pieces together for the administration. You're realizing like, hey, these people are actually people who seem to understand the technology and the assets, and they're going to be friendly to them rather than abrasive. So I think that's a big deal. Second thing is 100k is a pretty big psychological, I think, milestone. You know, there's a lot of people who said, hey, I think this is going to zero, hey, I don't think it's really that valuable, whatever. Once it gets to $100,000, you're kind of like, you know, there's not that many stocks that reach $100,000. Now of course stocks are constantly doing, you know, splits and kind of all these different things, but like, you know, Berkshire, a couple thousand dollar stock. And so you start to get into this like rarified air where people are like, hey, I can't ignore this thing. And so I think that that's a huge piece of this is just seeing the price of the asset kind of cross that threshold is pretty important. And then lastly is we're now in the end of the year, and so the last two weeks of December in the stock market is usually a pretty good time. But December through March of halving years, so, you know, kind of halving happened earlier, we get December, we go to March, I think is historically a really, really good time for Bitcoin. And so if price continues to go up, Trump waltzes his way into the White House, you know, he'll be saying, you know, you're welcome the whole way there. And I think that him claiming that he's the Bitcoin president and let's say Bitcoin tripled, that would be, you know, pretty powerful, I think. So if, you know, by March Bitcoin is 130k, well, Bitcoin, you know, basically doubled, that'd be a pretty big deal.
