JD Durkin: Sam Callahan joins us now, Director of Bitcoin Strategy & Research at OranjeBTC. Sam, nice to see you here today. Grateful for your time.
Bitcoin down a little bit today, but on the backdrop of having a really nice rally back above 84,000. Do you see the picture of fundamentals actually strengthening underneath the surface of Bitcoin’s recent price action?
Sam Callahan: Yeah, thanks for having me back on. Yeah, I think fundamentals have never been stronger for Bitcoin. And partly that’s because of the strength of the network, as well as the institutionalization of Bitcoin.
We see large financial institutions continuing to lean into this asset class. You know, we have Citi announcing new services around Bitcoin. We had Charles Schwab come out and offer direct Bitcoin products. Morgan Stanley, the list goes on and on and on.
And they’re all seeing the same thing, which is there’s more demand for monetary alternatives like Bitcoin given this macro backdrop. You know, when we look at, say, the bond yields today rising, it’s all about the fiscal outlook and concerns around the sustainability. There are concerns around currency debasement, as well as financial repression.
In that environment of currency debasement, you’re going to see more demand for monetary alternatives like Bitcoin, like gold. That’s why Bitcoin just had one of its best months last month over the last five years, and it’s why it’s outperformed stocks over the last six months. And I see that continuing moving forward.
JD Durkin: All right. So it’s not just the yield curve here on Wall Street being stubborn. We’ve got fiscal concerns, obviously, geopolitics, inflation. What do all of those potential pressure points mean for the store-of-value argument for Bitcoin?
Sam Callahan: Yeah, I mean, people are looking at the 10-year and they’re saying it’s the highest level in the last 20 years. But really what they have to think about is the debt situation.
You know, back in 2007, when the 10-year was trading at these levels, debt held by the public was around $5 trillion. Today, it’s $32 trillion, six and a half times larger. And so can you really blame bond investors for wanting to be compensated more for lending to this government over the next 10, 30 years?
They can’t get their fiscal house in order. There’s real inflationary pressures. You know, nominal GDP is running hot. They should be compensated more. But the U.S. policymakers continue to intervene in the long end because they don’t want the higher borrowing costs that come with it.
You know, they continue wanting to run $2 trillion deficits. But really what happens when they intervene is the currency takes the pressure, right? It’s sacrificed.
That’s why, when you look at the purchasing power of the dollar over the last five years, it’s lost 20% of its purchasing power, according to the PCE. That’s an obscene amount of an erosion of purchasing power.
And so investors are going to seek alternatives when their currencies are losing purchasing power. At this rate, $100 five years ago can buy $80 worth of goods and services today. That’s incompetence. That is policymakers not doing their job of maintaining the price stability of the currency.
And so it shouldn’t surprise people to see more demand for assets like Bitcoin that can’t be debased.
JD Durkin: Sam, I’ve only got about 40 seconds left. You just launched the DIGI11 ETF in Brazil. What is the strategy there? What does it tell you about global demand?
Sam Callahan: Yeah. So one of the fundamentals that are strengthening in Bitcoin is improving investor access. I talked about the institutions building, but there are also more financial products coming to the market that give investors different ways to get exposure to Bitcoin.
Maybe they want more income and less volatility. That’s where digital credit products like STRC, like SATA and like DIGI11, which we just launched as an ETF, provide a new source of income in that market.
So it’s differentiated, it’s supported by large Bitcoin balance sheets, and it’s paid out monthly to investors in Brazil, denominated in their currency.
So you’re going to see more and more products like this that deliver exposure to Bitcoin in different ways that meet investors where they are, with different risk-return profiles.
And so that’s why we launched DIGI11. It just came out last week, and it’s listed on B3. And it’s the first product that we’re launching. And we’re hoping to have more and more over the coming quarters and years.
JD Durkin: Unfortunately, I’m short on time, my friend. I’ve got to get to a hard break. Sam Callahan, OranjeBTC. Come back and see us anytime.
