Tariffs, Trump, & Bitcoin Endgame | Jeff Park

Donald Trump’s newly announced 25% tariffs on Canada and Mexico (and 10% on China) have rattled global markets and sparked fresh uncertainty around the U. S. dollar. According to Bitwise’s Jeff Park—whose article “Tariffs, Triffin, and Trump: How the End Game Sends Bitcoin Vertical” has gone viral—this policy shift is fueling one of the biggest crypto-macro convergences since COVID. In this episode, we explore how these cascading forces could radically suppress Treasury yields, devalue the dollar, and propel Bitcoin into unprecedented territory. ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotifya-premium ------ BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax 🦄UNISWAP | BUG BOUNTY PROGRAM https://bankless.cc/Uniswap-Bug-Bounty ⚖️ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🌐CELO | BUILD TOGETHER AND PROSPER https://bankless.cc/Celo 🏦ONDO | INSTITUTIONAL GRADE FINANCE https://bankless.cc/Ondo ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/base:0x4be6cd4d402fed49eb2de95fbc8e737e8ffd3e7f/27 ------ TIMESTAMPS 0:00 Intro 2:40 Trump Tariffs & Bitcoin Connection 4:09 Fiscal Deficit Benefits 7:28 Plaza Accord 1.0 & 2.0 14:12 Tariffs Now vs. 8 Years Ago 16:55 What Happens Next? 19:36 Lowering 10-Year Rate 22:10 Fiscal Dominance Policy Control 23:28 The Triffin Dilemma 29:01 Bitcoin’s Impact 32:16 Trump Advocation of Bitcoin 35:10 Crypto & Real Estate 37:06 Eric Trump’s ETH Tweet 39:22 10-Year Yield Rate Lowering Invetitabilty 42:07 Bitcoin & Other Crypto Risk Assets 47:17 Bitwise’s Dogecoin ETF 50:05 Closing & Disclaimers ------ RESOURCES Jeff Park https://x.com/dgt10011 Jeff Park’s Thread https://x.com/dgt10011/status/1886125163642552606 ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:04David Hoffman?

  Bankless Nation, Terrace, Griffin, and Trump: How the Endgame Sends Bitcoin Vertical. This is the title of a short article written by Jeff Park, who is the head of Alpha Strategies from our friends over at Bitwise. Jeff thinks that the incentives and actions of Donald Trump and his administration is creating one of the biggest intersections with crypto in the macro markets that we've ever seen, even greater than COVID. We're recording this episode on the back of Trump's 25% tariffs on Canada and Mexico, and 10% tariffs on China. Jeff thinks that this is just the beginning, not necessarily with just tariffs, but of what Jeff thinks is the logical conclusion of United States monetary and fiscal policy, which he thinks is extremely low 10-year yields and a devalued dollar.

• 0:47David Hoffman?

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• 2:34David Hoffman?

  Bankless Nation, I'm here with Jeff Park, Head of Alpha Strategies at Bitwise. Jeff, welcome to the podcast.

• 2:40Speaker 01

  Happy to be here, David. Thanks for having me.

• 2:42David Hoffman?

  Jeff, as you know, on February 1, Donald Trump announced 25% tariffs on imports from Canada and Mexico. This sent stocks tumbling on Monday, but things have seemingly recovered on the news that these tariffs are being paused after both Mexico and Canada expressed desire in negotiating with Donald Trump. Yesterday, Jeff, you wrote this article titled, "Tariffs, Triffin and Trump: How the Endgame Sends Bitcoin Vertical." Jeff, really high level. How do and what do the Trump tariffs have to do with Bitcoin? How are these two ideas connected?

• 3:13Speaker 01

  Absolutely. They're connected at a very intuitive sense. The first is tariffs create chaos, and chaos is not loved by markets. And so while we think that for the short-term sentiment, risk could feel off, the reality is Bitcoin thrives in chaos because chaos is actually the moment for which Bitcoin shrines in the certainty that we know for the role that it can serve as a place of stability. And so that's one. The other thing is ultimately tariffs, no matter how you think what the endgame may be, whether it's actually temporary or whether it's permanent, the reality is it will create further fiscal deficits, both on the imposing and the imposed. And when you connect the dots there, we know

• 3:57Speaker 01

  Bitcoin is the ultimate trade to hedge for future debasement, and tariffs are going to accelerate it. And so both of these arrows ultimately point to Bitcoin at the center for which the upward trend is higher.

• 4:10David Hoffman?

  Okay, fiscal deficit, I'm just gonna ask some real one-on-one questions. Why does a fiscal deficit benefit Bitcoin? And why does the recent news of the Trump tariffs? Why does that imply that we're going to go into a fiscal deficit?

• 4:24Speaker 01

  Sure. So fiscal deficit is a way to gauge the creditworthiness of a sovereign backer, right? And so when you think about the US having mint-grade credit rating, it's because people believe the US will pay its debt back. Now, that has some implications about having sound fiscal budget policies and the ways that you're managing the duration of the forward pooling of the borrowing in a timely and sensitive way. But if you don't actually think the fiscal deficit is being managed, you get downgraded. And that's actually what you've seen recently with France having been downgraded. You are seeing some other Asian countries being downgraded.

• 5:04Speaker 01

  And the US has now come into the dialogue of whether these ratings have gone to negative outlooks, from stable outlooks to the fiscal crises that we've experienced in the past as well. And so they are related. And in that sense, Bitcoin has been the trade in how people thought of removing yourself from the system of the global monetary design. In fact, we talk about Bitcoin all-time highs, dollar-denominated, as Americans, which we're very privileged by. But the reality is, we hit Bitcoin all-time highs in almost every other currency in the world last year. And so while we are kind of anchored to this 100K level, that 100K is an American number. It's actually through the roof everywhere else, because dollar strength has been incredible over the last year.

• 5:48Speaker 01

  So this is all part of the relation to how Bitcoin is actually the base pair for most people, not the US dollars, and how they think about wealth preservation. So ultimately, tariffs are creating deficits, because at the core of it, tariffs are wasteful. Tariffs are economically wasteful. This is the reality in which you're introducing friction in the abilities from markets to function, and that is going to create some financial waste. Now... People also conflate wasteful to mean not useful, but that is not true. And that's actually where I think the lens to tariffs being useful is a powerful thing. And it's not about the deficit at that point anymore. It's about national security and other priorities that you may have that have non-economic values that you have to assign some utility for.

• 6:34Speaker 01

  But the reason that tariffs are ultimately going to create fiscal deficit issues is, for instance, in the US, if these tariffs are permanent, it is very likely that there will be inflation and prices will go higher. And in general, the way to offset that is actually you would have to provide it with a tax cut. That tax cut, in effect, also can be a counteract to the dollar strengthening by the imposition of tariffs, where the rising budget deficit lessens the creditworthiness that you and I just talked about, where therefore, American dollars may not actually be as trusted. And so, in a very perverse way, actually, the way you think about lowering the dollar is by spending more.

• 7:18Speaker 01

  And that's why ultimately, these things are tied together. And part of the solution here is that you're widening the deficit in some sense. To do that, tax cuts would be a big portion of it.

• 7:28David Hoffman?

  In your article, Jeff, you wrote, "Recognize that tariffs are often a temporary negotiation tool to achieve a goal. The ultimate goal is to seek a multilateral agreement to weaken the dollar, essentially a Plaza Accord 2.0." Can you explain Plaza Accord 2.0? What's the first Plaza Accord? What's Plaza Accord 1.0? And what does it mean to have a Plaza Accord 2.0? And why do we want that?

• 7:51Speaker 01

  Sure. So, most of the monetary system as you and I know it and the current generation has been a world in which the dollar has been backed by the words of the US government, i.e. there is actually no hard collateral. But that's not true for most of human history. And actually, most of the greenbacks' history. So, we have to start our journey in 1970, 1971, when the collapse of Bretton Woods kicked off this movement. The Bretton Woods system collapsing meant that ultimately, the dollar would no longer be pegged by gold. At the time, it was pegged at $35 per ounce. Once that became free-floating, that's when currencies started to have to pair their reference rate to other currencies.

• 8:32Speaker 01

  By the way, the reason ultimately why... The dollar had to be de-pegged from gold is the Triffin dilemma in itself, which is that there's a conflicting role if one's national currency also serves a role of being an asset as a global reserve for foreign countries too. So back then, there was a lot of demand for dollars because dollars was the thing that was used for trade. So to get more dollars out there, you actually have to go into deficit. There's no other way. You've got to print the dollars. What the problem now is, well, do you have enough gold to back that dollar? And now you can already see it, like the structural need for the dollar for trade is not matching actually the fundamental valuation of the dollar being backed by hard collateral.

• 9:17Speaker 01

  And so when Bretton Woods collapses, also essentially the dollar weakens and we enter a period of heavy turmoil. And what happens is the emergence of the US as an exceptionally powerful country in which the dollar does become this reserve asset that people still want to hold on to. And the dollar strengthens incredibly, regardless of whether it's backed by gold. And this is an incredible social experiment, but one in which the US emerges as a winner, or so you think.

• 9:46Speaker 01

  In the eighties, the biggest threat for the US economy is actually Japan. And Japan, at its glory of being an export-driven economy, was extremely competitive with the technological might that they were developing and able to export more cheaply as the dollar was strengthening. And so the biggest concern in the 1980s was actually not that dissimilar from the concerns that we are hearing about today in 2025, which is how do we onshore US capabilities to compete in the national and international stage? And you just have to replace Japan with another Asian country today, which is China. And that's basically the case for the Plaza Accord 2.0. So what happened in Plaza Accord 1.0 is essentially all the countries got together,

• 10:30Speaker 01

  Japan included, and there was a negotiated multilateral agreement that we would actually find the path to devalue the dollar. And the biggest counterparty that would be at risk to this would have been Japan. And you had to therefore wrangle the motion in getting them to acquiesce to these demands. And you can now get a sense for how strategic these conversations are, how delicate and meticulous they are in the complexity of trading partnerships, and one that requires a little bit of wisdom beyond just following textbook models that you learn in macroeconomics 101. And what now, the case for the dollar strengthening, the case for the dollar as a result, making it challenging for US to onshore their economy

• 11:13Speaker 01

  in the manufacturing and industrial capacity we might want to participate, is extremely similar to 1985.

• 11:23David Hoffman?

  Hmm. And then how do the Trump tariffs on Canada and Mexico suit this end? Like, how does the tariffs actually relate to a Plaza Accord 2.0?

• 11:33Speaker 01

  There are a few people who believe these tariffs might be a permanent fixture of the economic landscape going forward. I tend to believe that it is more of a tool for negotiating at this moment in time to seek other concessions that will exert military and economic might onto other countries in the future from the US's perspective.

• 11:55Speaker 01

  And so, without deciding what you think those tariffs represent today, you can actually have a lot of different conversations about the end game and its impact.

• 12:05Speaker 01

  I think Trump is extremely sincere about several things, but the thing that is most sincere is he does want to bring back some of the exported capacity of American manufacturing and industrial sector home.

• 12:24David Hoffman?

  He wants to bring jobs home. Yeah.

• 12:25Speaker 01

  He does want to bring jobs home. It's why he's in office. A big chunk of his constituents are reversing the globalization movement. And so, this is, I think, something that he does mean sincerely wants to happen. Now, the reality is, as we've said, Tariffs are wasteful and there are things that are beneficial to having comparative advantages where you can specialize and trade and do things in a way that is more capital efficient.

• 12:51Speaker 01

  But it's also possible that the era that we're entering is one that is not driven by that shared vision, right? And that fracture is real and the and the and the and the multipolar powers emerging through Russia and China is actually real. And so in that sense, you might have to give some room to the reality that tariffs might be a fixture in a permanent way, but it's also very bad for markets if that's the case. And the other thing Trump really cares about is actually the markets. He's very, very honest when he tells you that he looks at the stock market every day and he just wants to see it go up. And so when you just zoom out, know nothing about tariffs

• 13:32Speaker 01

  and you just know those two things, I think you'll hopefully come to the same conclusion that this is just a negotiating tool, which is, I think, what you saw in the past few days. You've seen him kind of back play a little bit and just test the water on how aggressive are my trading partners coming back at me. And even yesterday, you know, the demands that China has made on the back of the 10% tariff that Trump had imposed, you could already sense that China is behaving much more carefully than they were eight years ago in the ways that their demands are actually not equal in the pushback and they're acquiescing a little bit to the might of the US.

• 14:12David Hoffman?

  Interesting. Okay, so the news that came out on Monday was that Trump is imposing all these tariffs, or maybe it was on Friday. The market responded on Monday and also Mexico and Canada also responded on Monday as the news today is that the tariffs on Mexico and Canada are being delayed, paused for 30 days because my sense is, is that Trump is getting some, winning some negotiations with Canada and Mexico. They have both said that they're going to like send troops to the border. I don't know if we, the United States, Donald Trump is getting everything that he wants, but he has paused tariffs for 30 days. And then You also indicated that China is also being a little bit more flexible and willing to negotiate with Donald Trump more on on his terms.

• 14:57David Hoffman?

  Why is now different than we did this? We did this last time Trump was president eight years ago, as you alluded to, we did this whole trade war thing. What's different now that puts this in the United States in a position of strength more than eight years ago? Or is that not the case?

• 15:11Speaker 01

  I think what's different now is the picture has become clearer in the direction and the tailwind of the mood of the world, which is that when eight years ago Trump came to office, it was still a little bit of a dark period as to the questions it raised around the acceptability of that movement. But since then, you've actually seen the world go into more anarchic chaos with all the ways that power is being battled across multiple arenas. And you are seeing the rise of more protectionist oriented world leaders out there. And so Trump today fits more of like the mainstream era than once upon a time eight years ago, where he might have looked a little bit more like an iconoclast, right? Because you have to put this in the context of then Brexit

• 15:56Speaker 01

  and all these other things that had unfolded since where now it's been normalized that this is the direction of the world. And here's the beautiful thing about trade. Trade has to be multilateral, right? You actually cannot make any global monetary design solutions without there being bought in cooperation. And so that directive, I think, has become especially more clear now more than ever. The second thing is, I think China today is in a much weaker position than it was seven, eight years ago. Some of this is on the backlash post-COVID, but the other fact is China domestically is actually experiencing a serious financial crisis on the back of their housing sector. And so

• 16:42Speaker 01

  The challenge with Xi being able to navigate this internally is a little bit more in the benefit of the US to potentially exert more influence than it was able to do 70 years ago.

• 16:56David Hoffman?

  So where do you think we've landed with this tariff conversation? Like I said, Trump tried to impose these 25%. He's paused it for 30 days, but China, or excuse me, Canada and Mexico have played nice. As you said, China is a little bit more amenable to the United States because they're in a weaker position. Where do you think this goes from here? What do you think is the next step in this tariff game?

• 17:17Speaker 01

  Yeah, so I think the next game is, and it's not going to be tomorrow, it's not going to be next week, but I do think there is going to be a globally coordinated Plaza Accord 2.0 type of event.

• 17:29David Hoffman?

  That's what's next, okay.

• 17:30Speaker 01

  Yeah, because the reality is the dollar is too strong and tariffs will actually strengthen the dollar as well. And that is not the outcome that Trump actually would like to seek. And so the way that I'm imagining this could happen is you have to have a new rejiggering of that social contract. And the social contract changes to this. You basically get China and Japan and other of your trade partners to invest more in long dated American bonds and essentially play a little bit of the factoring game on the back

• 18:09Speaker 01

  of that duration being a lot more powerful than the short end per dollar basis, right? So the reality is a lot of the US Treasury's financing program over the last four years changed to be short term oriented, meaning T-bills are actually a big focus of how the US is now funding itself. But that's actually a pretty dangerous place to be because you're at the whims of repricing every few years and you haven't been able to actually secure long duration DVO1 there. And you also need more dollars, right? Because you have to keep turning those portfolios. So the refinancing velocity means there's just constantly more dollars being used for that. Now imagine if you could term that out for like 30 plus, maybe 100 years, just term it out.

• 18:54Speaker 01

  Then you actually don't need those dollars. And the number one thing that we're all trying to solve is how do you get the dollar lower? How do you make these countries not hold dollars as a reserve asset? And one way to do that is yield curve control. Right? And that's why I think this idea of like yield curve control, but not yield curve control, is becoming more topically entered into the mainstream mindset. Because liquidity is actually a funny thing. A dollar today and a dollar 10 years from now is still $1. But the velocity of how much you need to turn that dollar over is different. And that's actually the difference between the dollar's strength and the long-term yield strength as well.

• 19:36David Hoffman?

  You said in your article, I have shared before that Trump's number one goal is to lower the 10-year yield rate. The reason being that his own bags depend on it, real estate. Can you expand on this as it relates to yield curve control without actually being yield curve control? What does it mean to lower the 10-year rate? And why does it align with Trump's bags, real estate?

• 19:59Speaker 01

  Yeah, this goes back to one of the most, I think, perhaps admirable quality of Trump. If there was one thing you can call out as admirable, is that he is blatantly and bluntly honest about what he wants. Now, that honesty also has translated into the fact that he's an extremely self-interested person. I might argue, most people are self-interested, and Trump is not ashamed to admit it. And so he has actually given you the blueprint and telling you exactly what he wants to accomplish. And the things that all of us can benefit from is to be on the same side of the trade of the president.

• 20:39Speaker 01

  His biggest bags, without a doubt, is commercial real estate. And he's been wanting to lower rates forever. You've seen the rhetoric come out when he even challenged Powell's credibility to remain neutral against influences. And you've seen how much he inserted himself into that conversation and made himself known that he will do things outside the general norm of the office to do such things. What I think is really interesting, though, is last week, Trump actually applauded Powell for not lowering rates, which is actually kind of paradoxical, because you would have thought he would have gone on a rampage like, we about like, oh, this guy, got to get him

• 21:24Speaker 01

  out of the office, he's not doing what he wants, Americans are suffering. No, actually, he applauded Powell. So why did he do that? I think it's because he knows Powell actually can't influence the long-term rates. And that's what you saw in November last year and December, where as rates were coming in, the tenure didn't come in at all. In fact, it went the other direction. It blew up and the term premium expanded. So I think what Trump has realized is actually the Fed cannot control the front end and Powell doesn't have any credibility to influence the long end of the curve, which is why he now knows he must use the power of the executive branch to carve out his own path to control for that 10-year rate, which I think is tariffs in the way that he's navigating this journey.

• 22:10David Hoffman?

  Is this related to what Lyndon Alden calls fiscal dominance, where it's actually the government that is really in control of, and it's fiscal policy that is in control of monetary policy and not the other way around?

• 22:23Speaker 01

  Yeah. It is, it is the reality that the Fed and the Treasury work together to enact one agenda for American dollar and foreign policy.

• 22:37Speaker 01

  And the reason is because the Fed can only truly control the front end of the curve. But the back end of the curve is actually controlled by the Treasury. Because they manage the issuance calendar and the maturity schedule of the bonds to reach these seether trade partners. And so even though we're all taught in school and the general media that the Fed is an independent actor and that they only care about two things, unemployment rate and inflation. The reality is these things are all intertwined and it goes back to, again, the Triffin Dilemma. Because if the conflict is that the currency which is serving your domestic goals is directly competing with your international goals of your trade balances.

• 23:22Speaker 01

  How could it be possible to have a Fed that only cares about domestic policies? It just cannot be.

• 23:29David Hoffman?

  Could you explain that a little bit more? So let's go back to the Triffin Dilemma. The Triffin Dilemma is that the United States has its own national currency. It also happens to be that that national currency is the global reserve currency. And the countries of the world need to receive the currency in order to do any sort of trade, either between them and the United States or between them and other countries as well. And so there's this always persistent demand for dollars to be able to go export to the rest of the world so that the rest of the world can trade amongst themselves. And so there's this net outflow of dollars, which is what we call a deficit. And what that's created is that it's actually like hollowed out internal manufacturing. Because we are printing money and sending it overseas, we're getting things back.

• 24:14David Hoffman?

  We're getting cars back, we're getting products back, things that are made in America. But it's actually cheaper for us to get it abroad because we have this trade deficit. We have to outflow the money. And so we get things, it's like this exorbitant American privilege, we get things on the cheap. And that hollows out like local American manufacturing because it has to compete with this outflow of money. And these, like, and this, what's this hollow out? Like Pennsylvania, all the manufacturing states that were blue that flipped red when Trump was elected in the first place. And so this is the Triffin Dilemma. And the Triffin Dilemma connect for me how it relates back to the yield and the value

• 24:54David Hoffman?

  of the dollar and how that aligns with Trump's interest on lowering the 10-year yield in his, his real estate bags.

• 25:02Speaker 01

  Yeah, so it's related because ultimately the exorbitant privilege is that the US gets to borrow long term for very cheap. And in a way, we all benefit from that. It's actually what anchors the US housing market. For example, when we all take out our mortgages, the ability for Americans to have those types of financial access is funded by our foreign creditors.

• 25:26Speaker 01

  But as a result, you've described exactly the offsetting side, which is that it creates the capital flows in a way that strengthens the dollar. And this is often called the twin deficit, which is the budget deficit in itself now being related to the trade deficit. And that is actually the core of the problem. The dollar is too strong. This is why there was a Plaza Accord 1.0, and that's why we need another Plaza Accord 2.0. And there will be details about that's different, but the goal is to lower the dollar, to restore the competitive strength and how Americans can actually be an export economy.

• 26:03Speaker 01

  I think the perverseness of all of this is that you you almost want to self sabotage your own fiscal credit to try to get people to not want to have the US as the reserve asset, right? Dollar as a reserve asset. Because today, actually, the dollar is in a really interesting crossroads. On one hand, it's been visible that dollars are growing as a percentage of foreign holdings as a reserve asset. But it's actually been declining as the medium of choice in settling trade and international financial transactions, which is actually a little bit paradoxical, too. You almost want the opposite.

• 26:47Speaker 01

  You want people to use the dollar for trade, but you don't want them to hold it and hoard it, creating it to go up. And this is one way that I also think that stablecoins has to be a relevant portion of that conversation. And I suspect a lot of this conversation will ultimately go towards the management of the yield curve that is then going to be offered to back such an asset as a stablecoin.

• 27:12David Hoffman?

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• 27:55David Hoffman?

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• 28:36David Hoffman?

  Plus, users can pay gas with ERC20 tokens like USDT and USDC and send crypto to phone numbers in seconds. But why should you care about Cello's transition to a Layer 2? Layer 2s unify Ethereum; L1s fragment it. By becoming a Layer 2, Cello leads the way for other EVM-compatible Layer 1s to follow. Follow Cello on X and witness the great Cello happening, where Cello cuts its inflation in half as it enters its Layer 2 era and continuing its environmental leadership. One of the last lines in your bit, we've talked about this briefly, never doubt the uncomplicated incentives of the transparently profit motive motivated and align yourself next to him. You're talking about Trump, of course, we talked about this. But you're the punchline you're really getting to is how Bitcoin is a vehicle to align yourself with the incentives of Trump.

• 29:19David Hoffman?

  Maybe you can connect that those two bits out of all of this, everything we've been talking about so far. How does this impact Bitcoin?

• 29:25Speaker 01

  Yeah, so many people today are concerned about the path dependencies and the second and third order effects of what these tariffs are going to do and how China is going to respond and yada, yada, yada. We don't know, none of us can know. But actually, what's really easy is solving it backwards by knowing what the end game is. And the end game, as I've described and as you've outlined here, is that Trump wants one thing to protect his own bags, which is lower 10 year rates. And that is nakedly obvious in front of anyone who can understand what his, what he's doing. And so actually, if you know that's the end game, it's a little bit easier to solve backwards as to kind of putting things in motion to get to that end conclusion.

• 30:05Speaker 01

  So if you take for granted that then the tenure is going to compress, two things are going to happen. One, risk capital in the US will be on fire again because there's now a wall of cash coming back into the market with the old lower that's going to be chasing risk. It's going to be great for the stock market. It's going to be great for Bitcoin. And if you actually thought tariffs were permanent, you will know there's going to be a large income tax cut associated with that. Unfortunately, income tax as a, as a tool is regressive in nature, right? Where the removal of it actually then creates more abundance of wealth at the top, which is more capital than that is going to seek risk.

• 30:47Speaker 01

  So there's actually a profound effect on risk capital if you thought an income tax would be, would be repealed. So that is incredibly good for Bitcoin. But the other side of it is if you're not an American and you're on the other side of that equation where you're suffering on the back of these tariffs. You're basically sitting at home, looking at TV and realizing your elected leaders completely failed you. And now they're basically on a race to the bottom to debase their own currency against a weakening dollar to basically try to sustain their export economy. So they're gonna print like as if there's no end. And what you're gonna witness is an acceleration of that depreciation of your non-dollar asset

• 31:30Speaker 01

  that you as a foreigner are denominated by. If you're that person, ask yourself, what am I gonna purchase to protect my wealth in a way that I seem to have no option as a citizen of any of these countries? The beautiful thing about Bitcoin, and this is the ultimate ethos of what it represents, is that it can be bought anywhere, anytime, without any friction in the ways that it gives the sovereignty back to the person, the individual, and so they're gonna buy Bitcoin too. So you got this incredible demand where both sides of the market, for a very different reason, one's for speculation, one's for insurance, but they all come to the same conclusion, you have to buy Bitcoin.

• 32:12Speaker 01

  And that's why I think this is as easy and clear as it can be for why it's so optimistic.

• 32:16David Hoffman?

  Do you think that this is why Bitcoin has become just like living in Donald Trump's brain? He's the Bitcoin president, he loves the Bitcoin industry, the crypto industry. Granted, we paid him a lot of money to help elect him, so that's, that makes sense. But also, he's like truly leaning into crypto. He launched a meme coin, he's launched NFTs, he has a DeFi app, he's called himself the Bitcoin president. Do you think that this is a coincidence, or do you think this is a part of Donald Trump's transparency? He also understands that the effects that he wants to have as president is going to be very good for the value, the price of a Bitcoin, and so therefore he has aligned himself with Bitcoin. Do you think that's a coincidence, or do you think he's also, in addition to bullish

• 33:00David Hoffman?

  real estate, he's for the same reason bullish Bitcoin?

• 33:03Speaker 01

  Yeah, this is a fascinating question. And one, when Trump was first originally against Bitcoin, it kind of blew my mind because everything about Bitcoin, to me, represented alignment with his own general belief, which is like a distrust of the state, the intermediation, and actually wanting an asset that could be a little bit removed from what he would call as institutional bias, as a personality, right? But then you have to remember, actually, the most protected asset class in this country, in America, is real estate. It's actually, I would call, the polar opposite of Bitcoin in some sense, because it's the most regulated, it's the most compliance-centric asset,

• 33:49Speaker 01

  and it's a protected asset class in some sense. And he actually does have a bag in that. And so, his calculus could have been a little different, which is the tail risk associated with Bitcoin that could then have impact upon him affecting those compliance assets, once upon a time, may have been a risk too great. But I think now, what you're realizing is that he's barbelling the strategy. You can own a bunch of really nice compliance asset that benefits when 10-year rates go low, and you can also own a bunch of resistance assets that also go up when 10-years go lower. And the thing is, in my Bitwise journey of talking to investors, the largest group of people that I've found who intuitively understand the usefulness of Bitcoin

• 34:33Speaker 01

  have always been real estate investors, hands down, because they know the importance of property collateral and the way that it actually stores value. And the things that is most discomforting to someone like Trump is that it kind of operates in a gray regulatory area where real estate is actually operated with 100% certainty of the regulatory arena. So I think over time, though, he's come to this view that he's barbelling his portfolio. I think it's actually super smart. And And he's preparing himself, I think, to continue to win the mindshare of that resistance movement alongside his greatest bags of compliance assets.

• 35:10David Hoffman?

  That crypto real estate barbell is something that I've noticed in my crypto journey inside, like citizens inside of the bankless Discord and even my crypto friends, there's just this general attitude that the only thing that's truly real in this world is crypto assets and real estate. And it's if, if a crypto person sells their crypto, which they very rarely do, most of the time, it's because they want to buy a house or invest in real estate. And so there's this natural equilibrium, this natural gravitational pull for the crypto investor to also become a real estate investor. And I think maybe what you're saying with Donald Trump is that we're actually just watching it happen in the other direction. We're watching a real estate investor naturally discover the value in the properties of digital

• 35:55David Hoffman?

  bearer asset, non-sovereign store of value.

• 35:59Speaker 01

  Yeah. Yeah. Yeah. Yeah. And I think it actually kind of helps that we're seeing more financialization in Bitcoin too, in the ways that the ETFs have come forth and MicroStrategy has come out to financialize different risk segmentation for the capital structure that can provide investor risk preferences. Because real estate too is ultimately a privileged asset class because of that very nature of it, right? Like it is, it is actually the hard collateral that then has like a multiplier effect on the securitization market that brings the arbitrage opportunities. So real estate investors are not always like directional. They're, they're actually investing on like the regulatory arbitrage and what

• 36:41Speaker 01

  is permitted with that asset. And I think Bitcoin entering the mainstream arena with like Sab 121 getting repealed, like improves the convergence of those worldviews, which is Bitcoin directionally is also useful, but there's going to be so much opportunity in financializing that too, that somebody like Trump, I think, could also into it. And hey, maybe Eric does too now that he's also in support of supporting ETH.

• 37:06David Hoffman?

  Yeah, this is, we're recording this on February 4th, the day after Eric Trump tweeted out. Basically, a very bullish, coded, I have alpha tweet about ETH. Do you know what he meant by that? What was that tweet? Do you have any indication of like what was going on over there?

• 37:22Speaker 01

  I don't, I don't. I suspect it has something to do with world liberty at some level and the ways that they would like to continue investing into non Bitcoin crypto ecosystems.

• 37:36Speaker 01

  But I don't know.

• 37:38David Hoffman?

  He tweeted out, "In my opinion, it's a great time to add ETH. You can thank me later." He then updated that tweet. He edited that tweet because you can edit a tweet in an hour. He removed "you can thank me later," so now it just reads, "In my opinion, it's a great time to add ETH." But the old tweet, you can still view. And this coincided with $175 million of ETH deposited into Coinbase Prime. Whether that's using Coinbase Prime as custody or using Coinbase Prime as a venue to sell, no one really knows because that's hidden behind closed doors. Some people are claiming that it's crime because he's like pumping up the price of ETH as he's selling it. Other people just think like he's just using Coinbase Prime as a place to deposit ETH. No one really knows. And to this day, we don't really know, I mean like 24 hours later,

• 38:23David Hoffman?

  we don't really know why he tweeted out this thing about ETH. But nonetheless, I think we do know that, I think a lot of crypto people were looking at Trump and he's like, and he's just using the crypto industry to get elected. We're like giving him all this free money. He's extracting so much for this industry. And you know, it's Trump. He's not really going to follow through on his promises. But I think crypto is different in that, you know, he's actually done stuff on chain. He has issued NFTs. His Baron Trump, you know, trades meme coins. He actually has businesses deployed and making money on crypto. And so it's not really accurate to say that he's not actually intimately interested in the well-being of crypto because his businesses are on crypto. He now has like multiple crypto businesses. And so it's not just this irrelevant.

• 39:09David Hoffman?

  Industry that is paying him a bunch of money to get him elected. Like he's making money from this industry. And so we are naturally aligned with Trump. And as you said, never doubt the uncomplicated incentives of the transparently profit motivated and align yourself next to him. So Jeffrey, just maybe kind of just play this out over the next couple of like, we have, you know, four more years of the Trump presidency in like the week two, we're in a trade war, tariff trade war, tariffs are on pause. But what do you think is like the next steps for the escalation of this, whatever this is to get to what you call inevitable, which is the lowering of the 10 year yield rate?

• 39:43Speaker 01

  Yeah, I think, uh, I think it's going to take time to imagine what that path looks like, but the end game will be some kind of ability to stuff long dated bonds to our foreign creditors. And there's actually a way that I imagine crypto is going to play a role in that explicitly. And I don't know in the timeline in which it could happen, but the reality is that stable coins again has to play a role in permitting that possibility too. We all know Tether is actually supremely successful. And there's a demand for something like that. Like that Tether has found product market fit. The question is, how do you repeat create some of those to the benefit of the US? And, uh, and that, that is part of, I think, the conversation about stable coins, right? Cause, cause stable coins too, on one hand is good in that it gives access to more people

• 40:28Speaker 01

  to have treasuries and bonds and dollars. But you can also imagine that's actually against like dollar policy. Maybe you don't want that many people buying more dollars, actually, unless you're buying the right kinds of dollars. And so there's a world in which you could see that converge. You know, at the end of the day, I think, I think the most important thing the risk market cares about is the, is the strength of the dollar and it's the 10 year rate. And my, my instinct is that trouble to whatever it takes to bring the 10 year rate down. And we've learned actually through the last four years, there's a lot of different ways to do it. You know, people ask like, well, exactly, how do you think it's going to happen, Jeff? And it's like, we don't know, because actually we didn't even know BTFP was a thing that could happen when Silicon Valley Bank went under.

• 41:12Speaker 01

  Like there are things that just happen when there's enough will to make things happen. And the reality is. America wants more rates and that's the thing that he's actually betting the house on. One more thing, just generally, we want crypto to be bipartisan, of course, and I fully stand by the importance of both parties understanding its value system. But if you squint hard enough, you'll realize that in some ways Bitcoin is more aligned with a lot of the values that are foundational to the Republican Party, right? Because the belief in self-determination, or the belief in having less regulation, where you give the

• 41:53Speaker 01

  rights to the individual, those kinds of things tend to be a little bit more on the base of Republican beliefs. And so I think what you're seeing, Trump is also embracing that in a way that is constructive to the party that he's leading.

• 42:08David Hoffman?

  We've talked a lot about Bitcoin in this episode, talking about the impacts of Donald Trump's choices as it relates to the Bitcoin price, but let's talk about, and really just precisely talk about, risk assets generally. Is Bitcoin and risk assets the same conversation? If Bitcoin goes up, risk assets go up? Or is there a difference, a nuance here that we should parse apart?

• 42:25Speaker 01

  Yeah, I think everyone has imagined one day that Bitcoin would be untethered from correlation to our risk assets as we know it. And there's actually a lot of ways to imagine that it already has. And the way you can imagine how it has is you have to zoom out. Day to day, when risk assets sell off very, very violently, Bitcoin will sell off very, very violently. And I think there's actually a reason for it. The reason is Bitcoin's number one value proposition is its volatility, right? And so if you see incredible sell-offs in traditional markets, where your perception of that value gap is wider, then you have

• 43:07Speaker 01

  to imagine the cost of capital to hold Bitcoin just went up relatively, right? So like, let's say I'm an institutional investor that loves certain stocks, and the stocks I love gap down 30%. The cost of capital to hold Bitcoin unfortunately just went up, because I would rather own those stocks that are down 30% with more certainty. So you have to sell Bitcoin. So there's always going to be that cost of capital question without Bitcoin having volatility, which is why I always show Bitcoin's volatility is the feature that people demand and will continue to demand.

• 43:41Speaker 01

  And in the long run, however, the chart is that Bitcoin is actually representing a moment in time for the price in which people transact. In that sense, there's no cheapness to Bitcoin, right? It's not like when Bitcoin goes down 30%, people think it's cheap. Because the relative benchmark to value is not based on any value mechanism. It's actually a flow asset instead of a state asset. And that's actually how commodities are generally valued. And so the thing that's nice about Bitcoin is you'll see the correlation when there's extreme movements. But it's only really those extreme movements and not the down 1%, down 50% types of market. There Bitcoins actually unrelated.

• 44:22Speaker 01

  And over a long period of time, what you see is that there is a persistent bid for Bitcoin at a price, which eventually, when you normalize it to any correlation, is actually uncorrelated over a long period of time to these risk assets. And that's the beautiful thing. Bitcoin doesn't have a value model that perceives cheapness or richness. It just is what it is at the price that people choose to transact and own an asset at a particular moment in time.

• 44:50David Hoffman?

  It seems so simple. I like the mental model of short-term correlation, long-term uncorrelation, decorrelation. I think that makes a lot of sense. So the first question was about risk assets. But what about specifically longer-tail crypto assets? So ETH, Solana, Fartcoin, you know, $20 million market cap coins. What do you think is the kind of the roadmap? If we follow the roadmap that we've discussed for Bitcoin, what do you think is the roadmap for just the long tail of crypto assets?

• 45:20Speaker 01

  Sure. I love my altcoin bags as much as the crypto bro next door. The reality, though, is I have a feeling that this cycle might look a little different than the last cycle.

• 45:30David Hoffman?

  Interesting.

• 45:30Speaker 01

  And the reason I say this is because historically, people looked at altcoins as a way to play some levered beta or levered volatility to Bitcoin for those who are truly seeking a high level of risk.

• 45:44Speaker 01

  But with the introduction of Bitcoin ETFs, and actually as of December, the introduction of Bitcoin ETF options, you now have the chance to create those extremely levered bets using Bitcoin instruments.

• 45:59David Hoffman?

  Using actual leverage, right? Okay.

• 46:01Speaker 01

  Yes, which you did not have in the prior cycles, right? You had Derbit, of course, but no one's really trading there at the retail level. But what you've seen that is MicroStrategy has capitalized on the same thing. That's why there's a 2X levered MicroStrategy ETFs now. That is an all time favorite. The Nvidia 2X lever ETF was actually the best performing ETF last year, believe it or not. It actually outinched Bitcoin by like 2%, which is funny to see. But it shows you that there's different ways to take those kinds of levered risk on bets with now Bitcoin that didn't exist before. And so the one counter argument I have is actually the capital that once upon a time

• 46:42Speaker 01

  would have gone to those all coins are actually now going to these Palantir 2X ETFs. They're going to the MicroStrategy options and leaps and Bitcoin ETF options, et cetera. That being said, I think there will always be interest in certain all coins. I personally think that Dogecoin is here to stay and it's going to have a profound market fit for the future in the ways that it's still at the best vehicle to trade cultural capital, in my opinion. And you'll see those types of things continue to, nonetheless, exist, but it will look a little bit more different in the dispersion of outcomes that it carries.

• 47:18David Hoffman?

  Right. Yeah, speaking of Dogecoin, since I have you here, Bitwise recently filed for the Dogecoin ETF. Just give us like the inside baseball. What was the thought process behind that filing? What was kind of the internal discussions at Bitwise? How optimistic are you guys about this? Just color in those lines for me.

• 47:36Speaker 01

  Yeah. At the most simple sense, Doge is as decentralized as any asset could come, right? From the construct of what we want to think about the ethos of crypto. So it's a little different than some of the other all coins that have a long history of venture backing and fundraising, et cetera. Doge is pretty clean, in my opinion. However, I think the risk at some level had always been whether people would think it is a serious token and whether it is actually a net negative outcome to think that this is a playful thing. But over time, I think we've just come to realize that the benefits to what something

• 48:15Speaker 01

  like Doge does to crypto as a community at large is pretty aligned, which is that we're always thinking about ways to educate our investors on the long-term mission of crypto. Of course, things are great when price goes up, but I think Bitwise's deep value in the end is actually we want to bring people on-chain and we want them to think about the world differently and challenge their fundamental assumptions on what that world could be. And Doge is singularly the mindshare of the most beloved meme coin, for which I would argue, everything in life and all financial assets are ultimately all memes.

• 48:55Speaker 01

  And Doge is perhaps the best expression of that culture capital being a source of a community.

• 49:02David Hoffman?

  Yeah, yeah, I couldn't agree more. There, it's obviously, it's just a huge milestone for the crypto industry to get a Bitcoin ETF out the door. And it does not, well, again, it's huge, it's massive, it's amazing. The Dogecoin, a potential Dogecoin ETF getting approved, brings its own unique threshold that we get over as an industry that's different and unique from Bitcoins. Like, we're getting over, like Bitcoin is a financial asset and Dogecoin is something a little bit more cultural. It's more of a cultural crossing of the chasm than just simply a new financial technology. It's a new cultural technology that is getting an ETF. And, you know, meme coins, I think by 2025, everyone understands, like, meme coins are just not going away. In fact, they're only getting bigger.

• 49:47David Hoffman?

  And so it is, it's a new, it's in addition to Bitcoin, it's like a new thing for the crypto industry, a new hurdle for us to get over, and that would be pretty cool.

• 49:56Speaker 01

  Yeah. Hey, it doesn't hurt that Elon continues to love it, which is great alignment. Like I said, always trust the motives of those who are transparent about the things they love.

• 50:05David Hoffman?

  Jeff, thank you so much for joining me on Bankless today. Thanks for having me. A pleasure to be here. Bankless Nation, you guys know the deal. Crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we are glad you are with us on the Bankless journey. Thanks a lot.