Why Bitcoin Volatility Is the BULL Case | Jeff Park & Matt Cole
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Why is Bitcoin's volatility seen as a long-term advantage?
When you zoom out and you look at Bitcoin from any four year period, nothing has changed.
But deep down, like we all know the current system is not on a good path and we have to start like ripping the bandaid a little bit. I think all of that points towards a pretty positive, healthy mood for Bitcoin in the future. What's going on with Bitcoin, guys?
How does the Fed's monetary policy impact Bitcoin and risk assets?
This is a lot of people in the room. I've been talking to people for the last couple of days. Everyone knows that Bitcoin long term is going to do well. But Bitcoin is not supposed to feel like this in the short term. So what's your guys take as to what's going on? Oh, come on. You two aren't going to fight. You've got an opinion.
What role does digital credit play in the current financial landscape?
Let's go.
First off, I loved Jeff's recent article about Bitcoin row. And so that's why I was saying, well, you just wrote a great article on that. And I kind of think about the world the same way. And so first off, when you zoom out and you look at Bitcoin from any four-year period, nothing has changed. We are in the business of underwriting volatility.
How can Bitcoin treasury strategies generate yield?
And so what I mean by that is, I don't know about you guys. I didn't predict that Bitcoin was going to be where it is today, but I did expect 50% drawdowns still as a regular occurrence in the forward-looking view of what we expected Bitcoin to do. And in our company view, and this is just kind of coming from a pension background, is if I can underwrite time and direction, then I don't have to forecast an individual quarter, an individual year. And so my thing is, has the fundamentals changed? Is the U.S. still taking out debt at an unsustainable rate? I think the answer is yes. I don't know if you have a view that the debt crisis will be solved in the near future. I think it's going to be worse. I think it's going to be worse.
And so if that's the view, then really this drawdown is nothing to be out of the ordinary and the fundamentals haven't changed and so we just write it out i think warsh had something to do with it which we can get into but i think nothing has changed and so we just write it out and question if the fundamentals have changed and i don't think they have what what do you think uh warsha's impact or having warsha as the uh fed chair next is that good or bad for bitcoin or agnostic
Yeah, so for sure what Warsh has shown is Bitcoin's correlation to risk assets in general are at an all-time high. Because I think what happened with the Warsh announcement wasn't necessarily a Bitcoin sell-off, but it was actually a risk sell-off.
What are the implications of Kevin Warsh's potential influence on the Fed?
And that correlation has increased pretty dramatically, I would say, since last summer and got accentuated even with the news flow today. So I think there's two versions of the story, right? Because on one hand, There is this hawkish version of balance reduction as a journey that we have not ventured into beyond what the sample reserve system could look like. And there's a lot of uncertainty about this, which which is why I think you can see risk assets generally being sold off. And Bitcoin just is now correlated to that dynamic because it's owned by the same portfolio managers in a multi-asset framework where they're underwriting that to be a risk asset. But the thing that I'm long term really bullish about Warsh is if he actually is able to be what I call like a very pragmatic economist to like rewriting the engines of what Fed independence should look like.
There's a version where the whole monetary setup as we know it is finally going to evolve into something that is a little bit more anti-fragile. And in that world, there's a restoration of what true store of value could look like as a reserve asset. So long-term, I do feel like it's a little bit painful always to kind of introduce volatility to change from an institution that we've gotten very comfortable with. But deep down, like we all know the current system is not on a good path and we have to start like ripping the bandaid a little bit. But long-term, like his holy grail towards what he wants the Fed to be and what he thinks the role of like the interest rate should be is
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Chapters
6 chapters
1
Why is Bitcoin's volatility seen as a long-term advantage?
0:00–0:17
2
How does the Fed's monetary policy impact Bitcoin and risk assets?
0:17–0:34
3
What role does digital credit play in the current financial landscape?
0:34–0:56
4
How can Bitcoin treasury strategies generate yield?
0:56–2:33
5
What are the implications of Kevin Warsh's potential influence on the Fed?
2:33–13:42
6
How does Bitcoin's correlation to traditional risk assets affect its future?
13:42–20:26
Speakers
3 identifiedMore from The Pomp Podcast
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