Why Bitcoin wins no matter what: David Brickell on war, debt and liquidity

Transcript

Crypto and Bitcoin for me is like the natural complement to AI. I mean, in a world where we've got these AI agents trading one another, that that's that's going to need to be on permissionless rails, uh, decentralized rails. The conflict with Iran is still in progress, and the macro landscape is getting more volatile and more uncertain. What are markets telling us at this time? What assets are going to benefit the most from all this uncertainty? And what should investors be focused on during all of this? Hello and welcome to Milk Road Macro, the podcast that knows that liquidity drives everything, but it is still possible to drown in only 6 in of water. I'm your host, John Gillan. Today is Tuesday, March 3rd, and today we are joined by David Bickl. David is a finance expert with over 18 years of

experience in macro and trading, who's transitioned fully into cryptocurrency, as the head of international distribution at Front Financial, a digital assets focused institutional capital markets platform, and as the co-founder of Blue Coast Capital, a boutique crypto capital firm. He co-hosts the weekly Crypto Options Unplugged podcast and authors the London Crypto Club Substack. David is going to give us his macro outlook on what's going on right now and break down a whole lot of alpha for us. So, if that all sounds good to you, make sure you like and subscribe. Share this episode with somebody who needs to hear it. Today's episode is brought to you by Sum. Turn cryptot tax chaos into confidence. And without further ado, welcome to the Milk Road Macro Show.

David, how are you, sir? >> Yeah, I'm good, John. Yeah, good to be here. How are you >> doing? Well, man, I'm getting over a cold. There's war breaking out. World War II has started. Uh, so it's it's a great time to talk about macro. Uh, David, the conflict in the Middle East is still causing a lot of volatility in the short term here. How are you reacting to this situation and does does this change anything from your macro perspective in terms of how you view the markets and the economy here? >> Yeah, I mean look um I think when when you know any kind of event like this it's it's very uncertain. Um and it's always a kind of you know shoot first, ask questions later type response. And I think that's what we're seeing in markets, right? You just you just kind of um button down the hatches. um risk

management's key and you're not really thinking too much around you know you what what the trades right now you you just and this is what we're seeing you're just going to see global asset managers just trying to really preserve risk and and hedge themselves um and then then take stock of the situation um so I think like you know longterm these things you know don't tend to impact I don't think shortterm yeah it's just for me a riskmanagement consideration and and probably not much more than that Um there are obvious impacts and and we can get into this around you know how how I kind of think this feeds is the basement trade um and all that sort of stuff.

Yeah. Right. Right now it's just a short-term trade of um yeah that that's kind of you know all all risk models will be flashing right now to say we all need to derisk. every single trader out there is getting a tap on the shoulder to say even the positions you like you're gonna have to take them down because we just need you know we just need sort of lower risk exposure right now which is probably why you're seeing gold get hit um you know you're even seeing bonds get treasuries get hit so all positions just getting taken down and I always say in these situations you know like we saw during COVID initially all correlations go to go to one and it's more what I call like position off rather than risk off if that makes sense uh but obviously um that that's going to obviously have a

big hit hit to risk generally. >> Gotcha. Yeah. And it's been interesting to see the volatility because um you know equities futures opened down on on Monday uh but then recovered to new highs by midday and it's just been this sort of like tugof-war in the markets. Um oil though has spiked up much higher and there's a lot of analysts calling for it to go higher from here. Do you have a view on this and then are there any other assets or or you know areas of the market you think will benefit from this change longer term? Yeah, I I mean like obviously again oil's like the knee-jerk trade um to to sort of go long when you have um a conflict in the Middle East. I I think look none of us really know at the moment. Much will depend on obviously the length of the

conflict itself, you know, uh how long the the straight of hummus like remains shut, you know, all those things um you know are going to are kind of unknown at this point. Generally, I I I would be inclined to fade a lot of those moves. Um I I think I'm always on the side that that um you know, you called it, you know, the taco trade or or whatever you want to kind of call it. All sides are always incentivized to um to come back to the table. you know, if if you if you look at, you know, the importance of China, um, you know, in in the you obviously global economy, but particularly in the commodities trade, you know, China China

get a lot of oil from from Iran, and that's going to impact them. They'll have a lot of sway on this. You know, they're not going to sit back and and not allow um, you know, exports to reach them. So, yeah, I I I tend to fade it. I I also do feel that that this kind of premium's been building in the market for a little bit. So I I think there's a lot that's probably being priced and we tend to first like overshoot these things and and then we'll we'll kind of you see profit get taken and things settle down. So my my my instinct would be to kind of fade it and and I I I always all the macro bears love to come out sort of growling when these things are going on and you know the the $100 a barrel oil and you know that that's

always like the scary trade, right? So it tends to get a lot of the headlines. Uh but they tend to not really kind of play out that way. Um already you've seen like OPEC say they're going to increase production. Um, obviously Trump and Bessant are in drill baby drill mode out of the US. So, you know, there's plenty of offsets to this. How that also impacts demand as well. Um, you know, there's a lot of moving parts to this. So, I'm not necessarily in the camp that that oil is going, you know, sort of, um, screaming much higher from here. But look, understandably knee-jerk. This is a reaction. And look, there's a lot of unknowns as well. So much will, you know, things could change very, very quickly here. And it's um, it's a fast evolving situation. Quick pause here. If you like this show, you are going to

love our Milk Road Macro newsletter. It hits your inbox twice a week with everything we can't fit into these episodes. Charts, Fed moves, liquidity trends, recession signals, all the big forces that are shaping the markets. It's free, it's fast, it keeps you ahead of the next macro move. Hit up milkroad.com and subscribe. Yeah, I agree with all that analysis. One of the reasons David I was so excited to talk to you um is you come from this macro background but you now are very focused on crypto digital assets um which I think is just like an interesting and sort of a unique intersection of that that macro crypto background. Um in your latest edition of your London Crypto Club Substack article you talked a lot about how wars and situations like this you know after we get through the

short-term knee-jerk reactions as you said they tend to lead to situations of increased debt and increased liquidity. Um, and I'm curious how you expect that to happen here or if you expect that to happen here and what that looks like that as that begins to play out in the market. >> Yeah, I I mean like this is kind of this is kind of why I'm always like looking to fade like risk selloffs based on war and and and probably taking a lot of flack like others um on Twitter and whatnot in the last few days of you know the the nothing ever happens crew. But when I say nothing ever happens in terms of sustained impact on markets, nothing really ever happens, right? Um it it feels very much like when Russia invaded Ukraine and again we were getting similar stories, right? Russia big oil

producer, oil's going to 100 and whatever it was going to be. Um you know this is World War II and quite quickly we sailed through it. I I will say as well if you look back when Russia invaded Ukraine that was um early 22 when the Fed were about to embark on the sharpest rate tightening cycle arguably in history. So very different conditions sort of right now. Um if I step back from what's been going on, still very much in a kind of easy rate, easy liquidity environment. Um so I'm kind of not too concerned. But back to your kind of question, obviously look look wars have to be funded, right? And that gets funded by debt issuance. Uh so we're

going to see sort of more explosion of of fiscal deficits not just from the US from everyone else is going to have to sort of beef up beef up their national defense um in order to fight this war. Again depends how long it goes on but ultimately that has to get funded and ultimately you know that that eventually ends up getting if the if the market's unable to provide liquidity for it that the the Fed end up printing it. Um so so that's why I tend to think war actually ends up being quite good for for markets because because it it leads to increased debt which necessitates the need for increased liquidity being pumped into the market. And the thing that I've argued for many years really since 2008 and and I was at Leman's in 2008 so I

had a kind of front row seat sort of world blowing up but if I look at what happened then um you know essentially essentially we saw central banks uh and governments their response to what was you know the the kind of natural end of a credit based fiat system was to stop the whole financial system imploding was to ask fish inflate the assets that are the collateral to underpinning the whole financial system. And ever since then, I've kind of like gone from being being like a macro bear like a lot of macro guys are to being a more more sort of bullish understand that we're functional liquidity and saying that central banks in my view have kind of removed the left tail risk like the the sort of real sort

of strong risk off left tail risk from these markets because they will always come in and and and support the market with liquidity. Um because again all of these assets be it equities, be it bonds, they're the collateral that underpins the financial system and we've seen it time and time again. Um and you know if you go back to last April quite quickly you saw even sort of Trump and Bessant pivot on on on some of their tariff plans on their spending plans um in terms of you know look looking to reduce spending quite quickly went well actually we we'll kind of outgrow grow the debt rather than kind of cutting back on anything. Um you saw it in the regional banking crisis in 23 the Fed

quickly came in to come and support that market. So I I I always kind of feel that really extreme left tile scenario that the bears are always waiting for and then you kind of think we're on the verge of World War II. That's going to be it. Well, actually, you know, the the there's kind of in my mind that that Fed put is is always alive and kicking. They often need a reason for it to be triggered, particularly if they're, you know, being cautious with monetary policy, what have you. But but in in the case of war like no one needs no no central bank needs an excuse to to go and hit that button and and and print the money and support markets. The the other thing like strategically is like the the big risk for the US in all of this if if US equities absolutely crash

and the US Treasury market absolutely crashes like that that just encourages Iran to keep going as long as you can. Right? So the there there's a huge incentive for central banks in cahoots with the government to we need to maintain market stability, right? So that we can carry this on and go, look, we guys, we can go as long as you like, right, on this. And so I I I just I just always think there's this there's this incentive to to keep markets um keep keep liquidity high and keep markets functioning and and and that ultimately for me in a way is like the number one job of central bank and again when I have people like not to sort of diverge too much when people push back against that you know if you look at in December the Fed ended like quantitative

tightening partly because of what we were seeing in terms of some of the funding stress in in the US funding markets and That's a result of again like just too much debt issuance that the market and and treasury issuance that the market was struggling to take down. Um you also at that time had uh the the the government shutdown which again sort of took liquidity out of the market. So they they they quite abruptly ended quantitative tightening and then it was quickly followed up with the announcement of these um reserve management purchases and and the expansion of the Fed balance sheet again. Now that's nothing to do with the economy or or monetary policy. that is all about providing sufficient amounts of liquidity um for the market which b which is essentially their way of saying

we we need to maintain a a sufficient amount of liquidity so that the treasury market continues to function and doesn't collapse. So if that comes under any kind of pressure during war then then they're going to maintain that and and and whilst the treasury market might be a big focus like obviously um all these things feeding if if equities are blowing up then then they're going to come in and help that out as well. >> David I did not know that you were at Lehman in 2008 and it makes a lot of sense to me now why you've become more of a Bitcoiner. Um so yeah we could do a whole podcast just on that I'm sure. I I wanted to ask about um your your most recent uh Substack article you it was called heads I win tails you lose and it was about Bitcoin and you were saying

that Bitcoin is a hedge against both sides of this risk right like it's a hedge against geopolitical instability and systemic failure loss of confidence in treasury markets and in governments but it's also it benefits a lot from the sort of explosion of liquidity the money printer situation and I wonder if you could elaborate a bit on how you see Bitcoin as capturing benefiting from both of those scenarios and why that asset's so unique in doing that. >> Yeah. I mean I mean what what I think is quite interesting, John, like and obviously we've all been doing a lot of soulsearching around Bitcoin's underperformance over the last few months and if I if I really s simplistically look at at Bitcoin and why it's underperformed, I say Q4 was that liquidity story, right? Um um I mean I I mean for a long

time supporting my kind of bullish view on Bitcoin was was seeing this draw down of of the reverse repo facility right there was over $2.5 trillion dollars parked in that and again we don't need to get into that that money was coming into the market that that RRP facility basically went to zero at the end of September. Bitcoin peaked what on the 6th of October. Um so we we had this liquidity tightening. We saw it play out in US funding markets that that started to that that kind of marked the top of Bitcoin. Then coming into this year once we kind of fed her back in balance sheet expansion mode. There's like globally liquidity is still very high. So I I was never really concerned around that. But but the the US is kind of at the heart

of that, you know, that that system. Um and and and the dollar obviously is is fundamental to sort of global liquidity. So I kind of felt coming into this year we we we'd trade better. Then you had January where we had the Greenland stuff. Then we had worries about another government shutdown at the end of Jan. So okay, well that's why we're still not quite recovered. And then and then we get into February and we have this whole AI trade and and Bitcoin essentially has been trading onetoone with software stocks and this fear that um AI is going to almost cannibalize a lot of these um these sort of software businesses. is everyone's going to be vibe coding their own software company and um you know Salesforce and the like go to zero. Um

but so so they're kind of my reasons you know why Bitcoin's underperformed and then everyone's kind of then gone ah you know it's lost because gold gold's still pumping gold's plan a debasement trade um and you know uh Bitcoin's failing in in all its narratives and I kind of don't feel it really fouled in in the narratives um it it just had other kind of drivers there's also been structural supply and all these other things but um but yeah ultimately Um I I kind of think you know Bitcoin covers the left and what I call the left and right tail of the risk distribution. I.e. it's the ultimate risk on you know everything's pumping because the money's flowing, liquidity is pumping, equities are

pumping and Bitcoin is the high beta risk on asset, right? Um so so it it kind of captures that. That's the right tail. on the on the left tower when we've got sort of major risk of or or probably more than that when we're kind of questioning um when when we're seeing existing like economic and political structures under threat then Bitcoin for me becomes the ultimate kind of hedge against the failure of those those systems and you know if you look back over the last few months we've kind of even even with the rotation out of tech right like actually indices haven't traded far off their all-time highs so actually we've not been at either end of of that that risk spectrum. We've kind of been somewhere in the middle and then

Bitcoin's kind of just got chopped up on this on this rotation out of tech and what have you, but we've not we've not visited either ends like we've not seen seen like like US equities kind of screaming higher um to to kind of pull Bitcoin up and and then we've not had a big risk off until we're seeing today. So, I I I kind of feel like like Bitcoin here is kind of rediscovering the narrative and maybe this was the narrative spark that we needed just when everyone thought all all the positive narratives around Bitcoin were dead. Um but but I I kind of think um this was the the the narrative spark that that we needed to kind of get us going. And and what I mean heads I win, tales, you lose is I kind of see two scenarios from here playing out. either Trump's

miscalculated things in this war and we're in for a really sustained uh you know sustained more drawn out war with things like the straight of hum for for much longer than than anyone was kind of thinking um and this really sort of drawn out out war um which is going to lead to this huge huge sort of de deficit spending and and the money printing and everything else that goes with it. So in in that kind of left tail scenario if you like Bitcoin is going to start to win out and and we've seen that um when when initially when some of the like Middle East conflict with with um in GS and everything kind of originally Bitcoin sold off and then it started to actually outperform because then then markets became a little bit worried

about debt dynamics in the US. Um, so I I think that's the left hand that's the left tail scenario where if if we get a more prolonged war uh that intensifies um then then we're going to worry about about US debt dynamics that won't really be a concern in terms of they'll print that away and then it's like the debasement trade on steroids and I think you see Bitcoin Bitcoin accelerate higher gold will perform in that world as well. The flip side is we go to the right right tail, you know, the right tail sort of risk scenario whereby if if Trump's gamble if you like pays off um and he he manages to kind of bring bring this to a quick conclusion drive regime change in Iran and actually we see some

stability and peace in the Middle East, then there could be a huge like peace premium that sees all risk assets absolutely rip and then I think Bitcoin sort of captures that. So I I kind of I kind of looking at the world right now see us going from one or two scenarios and and both of them kind of take me to those those kind of like sort of um towel scenarios of that that risk risk distribution and for yeah for for Bitcoin I think it can win in both. So that's why I'm kind of saying it's like heads I win towels you lose. Um and this might be the narrative spark for Bitcoin to actually sort of really kind of uh put in a bottom and and and make progress higher. Crypto taxes are a nightmare. You've got trades across 15

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That's sum.com. Milkroad listeners can also unlock 20% off their first year subscription with code milkroad 20. The transparency of traditional blockchains forces a difficult choice. Utility or privacy. And you shouldn't have to choose. Midnight empowers innovators to break free from this limitation to a place where privacy isn't just a feature, but foundational. Go to milkro.com/midnight to learn more. >> Gotcha. Well, those are both two extreme outcomes, but I I think that some version of of one of them is likely to play out from here. So, we'll pay attention and see where things go from here. Um, I wanted to ask about another piece you wrote, uh, it was titled the AI paradox. And I thought this was a really great piece to capture some

conflicting fears we're seeing around AI. One side of this you described as a fear in the markets that all this capex spending, there's $700 billion of forecasted capex spending um, by AI hyperscalers. There's a fear that that won't lead to a return on investment. In other words, they'll do all this buildout, but they won't make any revenue to justify the spending. The other side of that fear you've touched on a little bit, but it's the idea that AI is so powerful that it's broken the moat of a lot of these SAS businesses and they're all kind of in danger now. Um I I wonder if you could just elaborate a little bit more on this. Lay out these fears for our audience and and how you see this these conflicting fears playing out from here.

>> Yeah, I I mean firstly I should give um I think it was Bank of America who who kind of like quoted this paradox um and highlighted it. Yeah, there just seems to be this like like disconnects between selling selling like the hyperscalers on this idea that you're spending you're spending all these billions on capex for AI that you know we we don't kind of know how how effective and what the return profile from that will look like. So, um, are you going to are you going to see the return on all this capex spending or or is AI essentially going to actually not be that impactful and you won't see the return on it? That's why that's selling off. On the other hand, you're seeing seeing the the all

the software stocks that's kind of going right AI is going to completely like destroy your business model. Um, I say everyone's going to be vibe coding um sort of their own SAS companies essentially. Um, companies are going to be doing it themselves. that's how impactful and amazing AI is going to be and that's why we're selling this and it kind of feels well well not not both can be true at the same time. Um, so again, for me, this is just a market that's gone. We're really uncertain here, right? Not a lot of it's making sense in terms of the moves there. There's um and and there's the huge contradictions with within some of those moves. And again, it's it's a it's a shoot first, like ask questions later type approach of we're

just kind of selling everything like tech and AI related um without really thinking it through. And it's strange for me that Bitcoin's got caught up in that as well in terms of like I mean I say the last sort of few weeks I've literally been watching um the IGV index the the uh eyesshares ETF index uh software stock index and we've almost been trading like tick for tick um with that now I I kind of get why Bitcoin would be I mean I guess it is a piece of software and technology uh but fundamentally it's very different from a sales force so a SAS company. Um, but again, may maybe maybe Bitcoin is yeah, it just sits in those risk buckets in a fund. And again, when you're when you're

being forced to to take down risk, you're you're just grossing down all the positions in that. So again, I feel it's being caught in the crosshairs of that rotation. Um, and then once that kind of calms down and settles down, people say, "Okay, well, who who kind of benefits from this?" Then I think people will look at Bitcoin. I think the the other thing within that um that that that I I wrote about a couple of weeks ago was essentially with the with the hyperscalers and and all the capex spending obviously in in terms of taking all this cash and spending it and essentially investing it for like longer term returns if you like um those those stocks become what we call like longer duration i.e. i.e. the the cash flow and return from investing in those

businesses is pushed out for a longer period of time. So there's an argument that that part part of the selling of those companies is portfolios when they look at their duration risk. They've now inadvertently become what we call longer duration uh because they've now they've now holding these stocks that they're not going to see the returns for a lot longer out. So therefore they're kind of rerating those lower. So therefore maybe Bitcoin gets kind of pulled lower with that because it's Bitcoin is the longest duration asset, right? It it has zero cash flow, right? So, so again I think it maybe gets gets caught in the crosshairs of that. But once market kind of settles down and and and kind of risk risk exposure has been managed. We we we're now you know we we we kind of

sidelined and now thinking about where to reallocate and where to position. Again I I I think Bitcoin starts to win out partly because it's like well look we we don't know what almost the duration risk is maybe with some of these these like hyperscaling firms. we we kind of know we're at with Bitcoin and it's the longest duration asset so we might want to put back on there. And then the other thing is like like crypto and Bitcoin for me is like the natural complement to AI. I mean um in a world where you know um we've got these AI agents trading one another that that's that's going to need to be on permissionless rails uh decentralized rails. So, um, you know, certainly there's there's the Catrini piece that everyone spoke about the other week that

spooked markets. Um, you know, he talked about, you know, stable coins being the ultimate winner in that. Well, again, what what are the chains and and and layer ones that are going to be settling um stable coins? Obviously, Ethereum comes to mind. So, so it's not clear to me that if you're selling things on on fear of the impact of AI that again, you're you're selling crypto. Um, but again, I I sometimes think, you know, market go through these irrational kind of moments where it's just, well, look, let's shoot first, ask questions later.

As the questions start to get asked, I I I think we'll start to see the the case for and the narratives for for crypto, Bitcoin all sort of coming back to the table. Um, so that's kind of the thinking around that. I appreciate the the detailed uh analysis on that and yeah I think shoot first ask questions later has been an apt summary of a lot of things in the market recently um I want to ask you a question around liquidity strains because there's a lot of demand for liquidity for the economy for markets from a lot of places as we've said the hyperscalers are going to spend $700 billion on AI infrastructure but there's also a lot of IPOs planned for this year um SpaceX Open AAI anthropic just to name a couple um but just these few alone own are forecasted

to have somewhere around $3.5 trillion of IPO valuations combined. Um, and so I've heard you say that liquidity drives everything. Where are we going to get the liquidity to sustain all of this AI capex, all these new IPOs, all the different demands that the market, the economy are making on the market right now? Um, you know, you gave the example of like the banks needing more liquidity and the Federal Reserve restarting reserve management purchases. Do you expect the Federal Reserve to step in with a huge amount of liquidity here or are we going to have air in the pipes and and run into issues with all of this?

>> I think the like the Fed are the liquidity provider of last resort um for markets, but as it relates to to funding markets and essentially the Treasury market, I think like with with all these IPOs um and and also any kind of debt that some of these companies are going to start issuing. Obviously, goo Google put out a 100red-year bond um couple of weeks ago that that that for me is just a rotation trade, right? There there's there's there's liquidity that exists within the system and it's an allocation choice of right do I want to pull it out of this business and go and go invest in this business? Um do do I want to be exposed to less this credit risk exposure? Do I want to sell that down to now now allocate to that? So, so I think

for me that's that's just a rotation thing and and I think you've again you've seen that play out um like like for at an index level equities for example have been actually quite well behaved. I say we're not far off um like record highs but there's there's been obviously a lot of um under the hood there's been a lot of damage done. You've you've seen you know some of the tech stocks take some huge huge hits, right? uh but that's then just rotated into like value stocks and and um and and other and commodity plays and stuff like that. So um for me that just becomes about the the liquidity to fund some of those things comes from in the system. The problem is is like how how much does how much and if we're I if if

markets kind of feeding risk on how much does that come out of like the safe haven trades if you like and treasuries and things like that ultimately things start getting sucked from there then then that's when the fed come in um and start having to provide that now I say the Fed like coming in and doing that I mean there's there's a lot of talk at the moment particularly with sort of Bessant particularly Walsh coming in at the Fed about you know Walsh talking that he want he wants a kind of smaller role for the Fed to play in in terms of their balance sheet and and their role in markets. Um I think liquidity gets freed up from from regulations and um you know there's a lot of talk around like SLR like these um supplementary leverage ratios um which essentially is

amount of capital that banks need to to hold against their assets and talk about completely exempting treasuries from that. So what that does that frees up a load of capital within the banking system that's essentially just sat there as like dead capital if you like. So through regulatory change they can free up a lot of capital that flows back into the market and then pushes everything out. So I I think that's where like a lot of the like liquidity comes from if we if we approach a situation where the broader market liquidity starts to tighten. Outside of that, I I just think you see again it'll just be outperformance of some sectors over others um in response to some of this issuance and and things like that.

>> Gotcha. Yeah. And I think that that's a big thing that a lot of people are not understanding the impact of, right? Those regulatory changes around what banks can hold and how much uh these treasuries um there could be a lot of of capital unlocked with that. Um so I think that we we'll see how all these things play out, but it's going to be interesting to see where all of this these trillions of dollars of of liquidity actually come from. Um, David, I wanted to finish with a question here. Uh, there was an op-ed in the New York Times la this past week titled, "Crypto is basically useless." Um, at the same time, I think you've been pounding the table pointing out how Wall Street and institutions are adopting digital assets, crypto, uh, like never before.

Morgan Stanley, for one example, recently applied to become a crypto custodian. So, they're they're moving in that direction of actually custodying digital assets for their clients. Um, that's a huge sign of faith from one of the the biggest and most respected institutions on Wall Street. Talk to me about this gulf that we're seeing because there seems to be a lot of people who think that crypto is just a scam, has no value, it's useless, and then a lot of people, especially institutions, that are going all in on digital assets. Where do you see this resolving? Where's this gulf coming from? What What are your thoughts on this? It's funny to see those comments like, you know, when when I I was getting these, I know, five years ago, seven years ago, and and now we've seen like, you know, like the most successful ETF launch ever. Um, now we're seeing

every every sort of bank come into the space. Now, now we're seeing, you know, stable coins um and the role that they're they're like playing politically, you know, potentially in terms of looking at, you know, deepening the role of the dollar in in a global and digital economy. Uh what that means for for maybe funding US debt, um and and obviously those sort of stable coins actually sort of being big buyers of treasuries as as we've seen with Tether. you know, I'm thinking of all that and I and and then we're seeing this huge explosion and um interest in u bringing, you know, real world assets on chain. Um a lot of those are coming on to to the Ethereum network. I I'm kind of like dumbfounded that then people go, "Oh,

yeah, but it's serving no purpose." like um we we we've just we've just had uh you know an invasion of Iran over the weekend and you know Bitcoin was really the only asset and crypto the only asset to trade now again you know all that stuff comes on chain equities come on chain become 24/7 then then maybe we we can all you know that weakens that argument but I I I I feel like it's it's just such a close-minded narrow view to say that you know crypto doesn't do anything you think like like when it's doing so much already and being so impactful. I I I think look it's like any new technology. It puts people out of their comfort zone. Yeah. Ch it challenges people's view of the world

and you've got to be adaptable to that. Um you know who who's it said at some at some point people will see the internet was was no more useful than the fax machine. Um you know but that that that that was a really kind of common a lot of people saw the internet as just like a kind of glorified library. um and didn't see see how it was the the impact on society. I I think as well the the other thing like when particularly when I think of Bitcoin in the western world I mean I think we talk about from a macro side like the debasement hedge and we we can't get out of this world of requiring ever more debt to fund growth right in fiat credit based worlds you you need more credit more debt for growth um and ultimately that that that

needs to essentially be printed right to fund that. So you got this constant debasement trade and then you look for okay well what are the hardest assets what what qualities you know are make something a hard asset say something like gold and the more you kind of go through the iterations in your head you kind of come back to bitcoin as being like the hardest asset having all the qualities of gold um but you know um it has the you know the fact that you're sovereign over over that yourself um you know the and and then also you know built built for a digital age where you can send and transact act like globally without an intermediary gold you still can't do that. So like like Bitcoin itself is is performing this huge function as as this this sort of

digital capital um I think as Michael Sailor would call it. Um that in itself is is just like a huge a huge thing. But a outside of the debasement I always and I get into these arguments with friends like you know I want to say about you know the ability just to send you know send value you know like instantly anywhere in the world. I'll get friends say to me look g give me your give me your bank account details I I'll I'll transfer you like money right now. I said, "Well, yeah, that's fine. In the Western world, things actually kind of work kind of okay. The the debasement aside, forget forget the financial crisis and and and in European countries bailing depositors in and all that sort of stuff. Um, you generally in terms of

functionally it works quite well, but go to an emerging market um and and try and send and receive money there. You realize it's really difficult. there's still I forget the number but there's still a couple of billion out there that that are unbanked and able to bank. So like like like Bitcoin is serving you know like all these purposes as well and I think that that's where you actually really see if you go to an emerging market country they they really get that right they really get the power of having as well like the levels of corruption in some emerging market economies that they're obviously we talk about the basement this kind of the basement in the western world is happening kind of more slowly in the background that we don't see it except for when we go why can't you know why

can't anyone afford a house anymore why are kids coming out of university and living in their parents' basements for so long. Um, well, that's because of the basement. If you're in an emerging market economy, you're seeing hyperinflation that you're experiencing real time. Um, and then to have an asset like like Bitcoin that that's actually kind of protecting from that that you can actually hold without the risk of someone taking away from you. Like there's so many functions that it's fulfilling. Um, it just amazes me that that that you get an op-ed in the, you know, in in a newspaper that says it's it's just useless. It's just so naive now. And you know, they're kind of making a big comment around some of the biggest asset managers and now banks in the world moving into something that they're saying serves no purpose. Like I I kind of think they're just on the

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>> Yeah, you know, look, I mean, it sounds useless to me. So, um I appreciate you explaining all that. Um David, I I want to end with one more question here. uh just talk to me a little bit about how you're thinking about portfolio construction and allocation right now because you know you said it's a kind of a a knee-jerk shoot first ask questions later market there's this broader debasement trade that you've outlined here and and liquidity strains we're seeing in the markets tell me a little bit about how you're thinking about a portfolio right now >> so you kind of I mean look short short term it's like like protection's key right so and and that's what you're going to see everyone doing right now um but in terms of positioning sort of past that I'm trying to think of you know who who the winners are going to be. You

know what what happens from here? Well, if there's a prolonged war, say we there's going to be uh that's going to be funded, right? They're not going to go, well, we we can't carry on anymore. We're tapped out of cash. You know, they they're going to continue to issue debt and if if necessary, the Fed will print it. So, I still think those basement trades are going to be big. So, and that's why Bitcoin for me is a I say heads I win towels, you lose. So I I you know given how much Bitcoin sold off and and deleveraged as well like that obviously for me looks a good trade. I still think gold's going to do really well. Right now gold's coming under a lot of pressure. Um but again I think that's position off. So there there's leverage and and you know spec money in

that trade again and they're getting told right we need to reduce positions which means taking gold off. But I think once money comes back to what's going to benefit from this I think gold gold will ultimately benefit. Look, I I I still think equities, you know, I still think US equities will sort of do do pretty well. Um, you know, no one's no one's stopping buying Apple iPhones anytime soon. No one's no one's stopping using Amazon. Um, so so these are probably all hitting valuations. Um, that I mean, sad sadly, it feels a little bit when you're talking about war and like really sensitive to the fact that people obviously from a humanitarian side of things are hugely impacted. Markets tend to kind of say lawn passes like stuff pretty quickly. So, so yeah, I I I I kind of I kind of think the safe havens

become obviously gold and bitcoin. Treasury is a little bit more complicated in that you kind of you get concerned around um you know the sign of kind of debt dynamics versus also being a safe haven. Um so I certainly never want to short treasuries in a market like this and would on the side of being long treasuries. Um, but I I pro I probably think gold's probably an easier easier long again once everything kind of settles down. I I I actually think again in terms of if you're looking at just pure currency, the dollar probably does quite well um in this environment.

Um so I probably wouldn't want to be be short dollars right now. So yeah, but I again I I like over sort of the last I don't know 10 years or so my career, the more I look at things, the more I think you know what I I just need to be long Bitcoin. Um, and I like I I'm kind of feeling that now. I I still think as well, look, when when all of this calms down, there's some big stories playing out in the world of AI and that's that's still going to be huge. Um, yeah, I think there's a lot of opportunities there. I think software stocks are probably massively oversold as well. So, there's like opportunities there that that you probably look at. So yeah, I kind of think you you just be very cautious right now and then you start trying to construct for a world that a a

maybe benefits from the money printing that comes from all of this, which it ultimately will and and b be when the world kind of carries on where it left off if you like what's oversold and and where's the value and and I think you you'll look back to tech for for some of that. >> David Bickl, Front Financial, thank you so much for being on Milk Road Macro. Where can we send people to find more of you and your work online? Yeah, you can see you can find me um I do a lot of my stuff on Twitter um or X as it now is LDN CryptoClub. Um so LDN Crypto Club um so you can find me there. Um yeah, that's probably probably the best place.

>> All right. Well, we will shoot first and ask questions later and I hope we can have you back on again soon, David. This is really fun. Thanks for being here. >> Thanks, John. Appreciate it. Thank you. >> And thank you all for joining us. I hope you all learned something today. So until next time, stay safe, stay educated, stay bullish, and we will see you all in the next episode of Milk Road Macro. Thanks for being here, everyone. Bye. Want insights on what's really moving markets and how we're trading each event? Subscribe to our channel, then join the Milk Road Macro and Macro Pro newsletters. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky. Never invest more than you can afford to lose.