The big long...

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Introduction: A Coming Crisis of Unprecedented Scale

The discussion opens with a stark and urgent warning about the future of the global financial system and Bitcoin’s role within it. The central premise, articulated by Wall Street veteran Scott, is that the modern banking system—a structure he describes as a "debt-based fiat Ponzi scheme"—is on a collision course with Bitcoin, an asset with properties the world has never seen. This impending clash, driven by the explosive growth of financial derivatives, the immutable scarcity of Bitcoin, and the revolutionary power of self-custody, is poised to trigger a crisis he terms "The Big Long." This event will not be a mere market correction but a systemic lock-up that starts as a liquidity crisis and rapidly escalates into a confidence crisis, with consequences far beyond the crypto markets.

A Veteran's Journey from Wall Street to Bitcoin

Scott is not an outsider throwing stones; he is a 25-year veteran of the financial industry's inner sanctum. His career began in 1989 as an options market maker on the Philadelphia Options Exchange, placing him on the front lines of market mechanics. He witnessed firsthand the transition from open-outcry pits to the high-speed, electronic trading that defines markets today, having founded Dash Financial, a leading options execution firm that built transparent algorithms for this new digital world.

His experience spans multiple crises, including the dot-com bubble, the aftermath of 9/11, and the Global Financial Crisis of 2008-2009. This deep, hands-on involvement gave him a profound skepticism of the system's inherent fragility and the misaligned incentives that govern it. He saw how rules could be changed overnight—like the banning of short-selling—to protect the system itself at the expense of free market principles and the ordinary citizen.

His turning point came in October 2013. On a flight to Spain, he read the Bitcoin white paper seven consecutive times. The elegance of a peer-to-peer, decentralized, bearer asset was a revelation. He immediately understood its potential as a true off-ramp from a system he knew to be fundamentally broken. Within two weeks of buying his first Bitcoin from a stranger behind a hotel in Madrid, he retired from Wall Street to dedicate himself to exploring this new financial paradigm, ultimately concluding that the system he left behind was unprepared for what was coming.

The Indictment of the Modern Financial System

Scott's central critique is that the current financial system is not merely flawed but is purposefully constructed as an inflationary machine designed to benefit a centralized "banking cartel." He identifies several core problems:

A Debt-Based Ponzi Scheme: The system is built on the perpetual creation of debt. The only solution to any problem or crisis is to print more money, which devalues the currency and erodes the savings of the populace. This, he argues, has reached "escape velocity," with money printing now completely out of control.
Centralized Control and Manipulation: He points to the 2008 crisis as a prime example of how the system saves itself. The bailouts of institutions like AIG were not to save the insurance company, but to prevent the collapse of its counterparties, like Goldman Sachs, which would have created a domino effect, taking down the entire global banking system. This revealed a tangled web of counterparty risk that no one fully understands.
The Illusion of Ownership: In the traditional system, ownership is an IOU. When you buy a stock like Apple through a broker, you don't own the share; you own a claim on the broker. The broker, in turn, owns a claim on the DTCC, which holds the actual asset. Legal precedents set after the Lehman Brothers collapse established that in a failure, the DTCC's claim is senior to the individual's. This "great taking" infrastructure means that in a systemic crisis, assets can be legally seized to recapitalize the system.
Broken Money, Broken Society: This toxic financial foundation, Scott argues, is a root cause of societal decay. The inability for young people to afford homes, the necessity of multiple jobs to survive, and falling fertility rates are all symptoms of a world built on broken, inflationary money.

Unpacking "The Big Long": A Thesis for a Systemic Crisis

"The Big Long" is the core of Scott's thesis, representing the inverse of Michael Burry's famous "Big Short." It predicts an unstoppable, upward price squeeze in Bitcoin, triggered by the very mechanics of the financial system that are now being applied to it.

The Fragility of Derivatives

Derivatives (options, futures, etc.) are financial contracts whose value is derived from an underlying asset. Scott emphasizes a critical, often-overlooked requirement for a healthy derivatives market: the underlying asset must be freely available for loan. Market makers and institutions need to be able to borrow the asset to hedge their positions. For instance, if Goldman Sachs sells a client insurance (a put option) on their Bitcoin, they must short-sell Bitcoin to hedge their downside risk. To do this, they need to borrow Bitcoin from the market. This works as long as there is a liquid and deep pool of the asset available to be lent.

Bitcoin: An Unprecedented Asset

Bitcoin introduces three properties that make it completely different from any asset Wall Street has ever encountered:

Absolute Scarcity: Unlike stocks, where a company can issue more shares to relieve a short squeeze (as seen with GameStop), or even gold, where claims can be rehypothecated endlessly in opaque vaults, Bitcoin has a provably finite supply of 21 million. There is no CEO to call and no central bank to print more.
Verifiable Audibility: Every Bitcoin can be accounted for on the public ledger. Through on-chain analysis and emerging standards like Proof of Reserves, the market can verify exactly where the supply is and how much is held by major entities. This transparency prevents the kind of opaque leverage built up in the gold market.
The Bearer Asset and Self-Custody: This is the most crucial element. Bitcoin is a bearer asset, meaning direct ownership is tied to the possession of private keys. An individual or institution can take final, sovereign settlement of their Bitcoin by moving it into a self-custody wallet. This is something that did not exist in the 2008 crisis.

The Inevitable Collision and the Feedback Loop

The "Big Long" thesis posits that these elements will combine to create a perfect storm:

The Trigger: The crisis will not necessarily start within Bitcoin. It will be an external systemic shock—a banking crisis in Japan, a sovereign debt crisis in Europe, or a failure of a major US bank.
The Flight to Safety: In a crisis of confidence, capital will flee the traditional banking system. For the first time in history, there is a liquid, global, non-sovereign asset that investors can flee to and take immediate physical (digital) delivery of.
The Great Withdrawal: Hedge funds, institutions, and individuals will rush to buy Bitcoin and, fearing for the solvency of their custodians (exchanges and banks), will withdraw their coins to self-custody.
The Supply Shock: This mass withdrawal will vaporize the pool of Bitcoin available for loan. The very supply that derivatives markets depend on to function will disappear almost overnight.
The Squeeze: Institutions that are short Bitcoin (as a hedge or a speculative bet) will be caught. They will be forced to buy Bitcoin in the open market to cover their positions, but there will be virtually none to buy. The price will begin to skyrocket.
The Negative Feedback Loop: The rising price and market chaos will cause more panic, leading to more withdrawals into self-custody. This further constricts the available supply, intensifying the squeeze. The process becomes a self-reinforcing, unstoppable feedback loop. Futures markets will break, ETFs will decouple from the underlying price, and the entire derivatives complex built on Bitcoin will seize up.

Scott argues that unlike past short squeezes, this one cannot be stopped. There is no authority to appeal to, no mechanism to create more supply, and no way to force sovereign individuals to sell their self-custodied Bitcoin.

When asked why the "smartest people in the room" on Wall Street don't see this coming, Scott points to a fundamental flaw in their incentive structures. Traders and bankers are compensated based on short-term (quarterly or annual) performance. Their goal is to maximize profit today. With a burgeoning Bitcoin derivatives market, firms like Jane Street and Susquehanna are making fortunes. Furthermore, the competitive landscape forces their hand; if a client wants a complex derivative product and your bank refuses to create it due to long-term risk, another bank will, and you will lose that client's business. This dynamic ensures that institutions will continue to build this fragile structure, ignoring the systemic risk in favor of short-term gains, just as they did in the lead-up to 2008.

The Aftermath: Creative Destruction and a Call to Action

Scott rejects the idea that his thesis is "doomerism." He frames it as a realistic assessment of a broken system. The person telling everyone to stay inside a burning building is the true doomer; the one pointing to the fire exit is the optimist. He believes the collapse of the current system, while incredibly painful in the short term, is a necessary act of creative destruction. Out of the ashes, a new system built on the hard money principles of Bitcoin could emerge, leading to a new Renaissance of human flourishing, much like the sound money of the Florin did for Florence after the Dark Ages.

His ultimate message is an urgent call to action. The time to prepare is now. In a crisis, the government will likely move to halt the exodus, shutting down exchanges and preventing withdrawals, just as they halted short-selling in 2008. The only way to be safe is to take sovereign ownership of your assets through self-custody before the panic begins. Once the crisis is underway, it will be too late. The choice is to be safe now or sorry later.