 The ongoing banking crisis seems to be a pivotal moment for the global financial system and for crypto. After the shutdown of two major crypto-friendly banks, the position of the crypto industry in the US looks increasingly precarious. On the other hand, confidence in traditional banks has been shaken and people are forced to look for alternatives. Bitcoin, an asset without counterparty risk that can be self-custed, may be that alternative. So what are the broader implications of the banking crisis on the crypto market? Is this the catalyst that will kick off the next Bitcoin bull run? To find out, I talked with Michael Glone, the senior commodity strategist at Bloomberg Intelligence. I'm Giovanni. On this show, we challenge the ideas that shape the world of crypto. In each episode, we assess a crypto narrative, a macroeconomic outlook, or a potentially disruptive technology. Only the most solid ideas will make it to the other side. I would just want to get a sense of what you think about the latest banking crisis and its relation with the crypto markets. So in a recent interview, you said that the current banking crisis is defining the value of Bitcoin. Can you explain exactly what you meant by that? So the Bitcoin was born out of the last significant financial crisis or the great financial crisis in 2008 and 2009. And I think this one is in the process of defining Bitcoin of global digital collateral. Now that's the current state. Bitcoin has done very well, bouncing back above $25,000 resistance. At the time, we're taping this on Wednesday, it's around $27,000. While the stock market still is under pressure. And I think what's happening is we're seeing a significant rally in Bitcoin this year up to about 73%. Obviously, 2 over so last year, but partly because people are realizing that it's becoming more like cold and US Treasury bonds, but just a higher beta version of gold. And it's gaining accolades as maybe not as so much as store value yet, but as a global digital collateral on the world that's going digital. So this financial crisis is quite significant. It's defining it. And I think people realize and think about Bitcoin, it's no one's project and no one's liability. And it's completely independent like gold. The thing is, it has it definable to finish diminishing supply. And it's so low as far as adoption in so early days. And this seems to be the trigger. The banking crisis, I think when people realize, oh, my money may not be so safe in a fractional reserve banking system, it might be safer in a fully collateralized stablecoin or crypto dollar. It seems to be hitting that inflection point that I've been looking for a while and just kind of, you know, tearing the headlights, watching, wow, is it really finally happening? There used to be a narrative that defined Bitcoin as hedge against inflation. Would you say that now this narrative has transitioned into Bitcoin as a hedge against banking risks? I think it's going there because I never believed in the hedge against inflation because that's so long term. Bitcoin needs to be around for, I think, decades before that happened. It's still just a baby. It's just evolving. It's so early days. It's such a small portion of global portfolios. But as far as a potential hedge against banking issues, yeah, I mean, it's coming up there like with gold and treasury bonds. Now, it's just a high beta high risk version. But I think it's people are realizing, well, I really probably have to have some of this, particularly if I'm looking to get away from risk assets like the stock market, this Bitcoin stuff is, if the stock market, if risk assets do recover, it's probably going to outperform. I just want to touch upon some of the fears that have been going around for quite a while in the US, because a lot of people were talking about this operation chalkpoint 2.0, which is basically this narrative according to which the United States authorities are trying to debank crypto in the US. How big of a threat is that? Are you not concerned about this trend? Surely concerned, but I think it's much more short term fear mongering. And it's typically not going to last. It's part of what this is an overwhelming rapidly advancing technology, and most astute smart people in this country get it. Some don't, they might be in incumbents in power, but like all the major changes in history, even like the key thing, the development of euro dollars, that was not really the trading of US dollars offshore and banks was not really supported by the US government. But we're seeing, I think this just overwhelming. So I think I don't know where that's going to go. I do know if the current administration continues to push back, they're likely to be voted out in two years anyhow, like our chairman of the SECs, but two years left. And I don't know where to add to define that so much, but it just means that it's going to be a pushback in the shorter term. But in the bigger picture, it's really going to be hard to stop this technology. We know that the growth of the price of Bitcoin still is very sensitive towards the US Fed monetary policies and how aggressive these monetary policies are being handled. So a lot of people saw this banking crisis as this turning point where the Fed is going to say, we have been tightening too hard. And now we are basically being hit by the collateral effect of that. So a lot of those banks collapse because of the too aggressive hike of interest rates that have been conducted in the last few months. So today we saw that all the eyes were pointed at the Fed seeing whether the Fed was going to hike more or stop and try to kind of basically prevent this banking crisis from continuing. So what is your reaction to the Fed's decision today? They hiked rates again. The ECB did a week ago 50 basis points. And it's probably the last hike market-sorty pricing for easing, a little bit of easing, not a lot yet. But the bottom line is they're potentially tilting us towards a significant recession, potentially depression. The hike into you can't be a hawk in a bank run is the quote from my colleague Tom Orrick. He's our chief economist. And he wrote that a little while ago, and they just did. They hiked and we were having a bank run. So the ECB, this is a global bank run. And it potentially potential in this country is just getting started. Remember, it's basically only been a year and one week since the first hike, the most aggressive hikes on a global basis ever. And there's this rule of long and variable lag. So what I see is the bank situation is a tree in the forest of what I've been pointing out for a while. Commodities collapsing. And it's just getting started because everything is tilting towards recession, except things like unemployment. And unemployment can only go one way. It's so low, it can only go up, which means the recession is virtually guaranteed. You look at things like the yield curve. So I think the Fed is just way far behind, like they were so far behind in inflation. Now that inflation is potentially collapsing, and I'll point that out in a second. The leading indicators, peaking housing, the banking crisis, commodities means they should have stopped and they still hiked rates. So I fully see looking forward, we're going to have official acknowledgement of deflation, other from government statistics, not from forward looking things like my commodities and the Fed tighten rate. So they're so far behind. The key thing we're going to end with, we're going to find out, and get is now by this time next year, Giovanni, we're talking, I'm pretty sure we're going to be talking about a significant enduring deflationary forces, the Fed not easing with the ease that it has in the past. Everybody is waiting for the moment when the next crypto bull market will kick off. So has this banking crisis accelerated this perspective or it has made it far further away? What is your view on this? I think the answer is yes, it's kicking off a next bull run, but it's very much subject to the ebbing tide of the stock market. We're talking right now with the S&P 500 around 4,000. I fully expect it to go to 3,000 in a recession, a normal recession, which is predicted the highest probability since 1982 from the yield curve. And that's going to be a pressure factor on Bitcoin, but potentially we're hitting that inflection now, where this recession is going to be great for things like gold and long bonds. And the thing is Bitcoin in there, I think it's hitting that, but it's just hard to say for sure. But I think the more the Bitcoin can sustain above 25,000, and the more the S&P 500 potentially pressures below 4,000, you're going to have an indication that Bitcoin is just going to take off. And we have to get there. I wanted to touch upon your view on the crypto dollar, so the stable coins, dollar-backed stable coins, what we saw is that a very respected stable coin USDC had a significant amount of their reserves in a bank that was a Silicon Valley bank. It collapsed and it lost its bag for a little while. So that kind of showed how these crypto dollars can also be very vulnerable to this sort of crisis. What is your view on that? It's funny, it's a unique that the problem with the new, the FinTech and the new technology was the old guard technology, the its deposit in the bank. That's the extent that it dropped because of the potential that its bank deposit, which is fractionally reserved, was not safe. What it's proving is these fully collateralized crypto dollars potentially are much safer than banks. There's no FDIC insurance needed. It needs, obviously needs regulation. That's just a matter of time. It's how the US regulates it that's going to matter, but it's happening offshore. Things like we've seen a major move away from USDC back towards Tether. Tether is the biggest one. It's controversial, but I've been just following Tether since it was around $2 billion back in 2018. And it just keeps going up with bumps in the road. Why? Because I think it's what's happened with Euro dollars about five decades ago when entities needed access to the dollar away from the US banking system. They did it in banks outside the US and created Euro dollars system. This is happening in crypto dollars. It's happening fast. The technology is overwhelming. We know that now Ethereum is going to turn fully proof of stake by allowing this staking. So with the Shanghai upgrade, what do you think is Ethereum going to outperform Bitcoin this year? So it hasn't been. I think we're at the stage now that Bitcoin is going to outperform virtually all crypto assets. If my base case of a severe global economic reset to recession is hands out. That's my base case. And I think Bitcoin will continue outperforming. I see Ethereum right now stuck between a thousand and 2000. Now it's at 1700. 2000 is very good resistance. It is the base layer for tokenization crypto dollars and things like that. But now we're in that stage where I think if I'm correct, the stock market goes closer to 3000 SMPI 500 and gold and treasury bonds outperform in this significant recession in the US, then I think Bitcoin will outperform virtually all cryptos, including Ethereum. That's been the case so far this year. It's the existing trend. And I think it's going to more like the accelerate. So we have to get through this bump in the road. And I think the bottom line to remember from my standpoint as a strategist, it's my duty to warn people when I see a hurricane coming, I see a hurricane coming economically. That's just based on what you said we spoke about early in the central banks tightening. Despite a bank crisis, despite forward looking deflationary forces, Bitcoin will probably be the best performer among the cryptos, including Ethereum. Okay, awesome. Thanks a lot, Mike, for giving again your outlook in these complicated times. And yeah, let's talk again very soon. Looking forward to Giovanni and thanks for having me on.