Past Performance, Future Structure: Is Bitcoin at a Turning Point as a Risk Asset? | Bitcoin 2026

Time's rolling, boys. I'll make sure I get these correct so you know who we are speaking to. Mr. Chris Kyper, we're going to start from this end. Actually, um Chris is a VP of research at Fidelity Digital Assets. Mr. Sam Callahan here in the middle is the director of Bitcoin strategy research at Orange BTC. And then Greg Sepilaro is a global head of research at Naidig. And today we are talking about Bitcoin being a risky asset. Everyone thinks it's a risky risky asset, right? So, past performance, future structure, is Bitcoin at a turning point as a risky asset. So, I think maybe the best place to start is we talked last week when, you know, a little premeating about your report that you just did, uh, Chris, and updated that from 6 years ago. And maybe we kind of start there just to set the tone and kind of work our way through. We'll hit some, uh, some pressing topics here today. So, why don't you just give a little rundown on just kind of where we're at and the update you just did to your report. >> Yeah, thank you. Thank you for reading the report. It's called getting off zero. Um we published it many years ago. We did a little refresh and the message is the same obviously to implore people to at least look at getting off zero. And the the biggest thing is having a 0% allocation may be fine. Um for some people maybe Bitcoin doesn't make sense. So let's state that up front. The point that we tried to make was if that's your position, you need to have some well-reasoned arguments for that. It's no longer acceptable, especially for an institutional investor, to just ignore it and say, "We haven't looked at it. We don't care." Uh because it's the best performing asset hands down the last decade. It's got one of the highest sharp ratios, Cortina ratios. Uh you can go through all the the nerdy stats of it. And so from an objective money management, you know, CFA lens, you should have some reasons why you're at zero. And if you're uh if you don't have good reasons, you know, then you should evaluate. And that's what the report goes through. And I'll just add one thing from it. Um, this idea of volatility has really changed, right? In traditional finance, volatility equals risk. That is the bedrock of traditional finance. And and for good reason. It's the old adage uh with stocks for example, they take the escalator up, the elevator down. So whenever volatility is spiking, it's because things are crashing. But Bitcoin is unique. It has high volatility not just to the downside which we all know about but also to the upside and that's what makes it so different from everything else and why we think uh investors need to consider it in their portfolios. So just to set the stage a little bit more as well, we I you know last four months it seems like 10 years have gone by, right? We talked about this last week and we've had tax revolts, uh learing centers, we've had all kinds of things going on. We have wars going on now. People just, you know, very uncertain times and markets don't like uncertainty. Um what do what are your guys thoughts? Maybe I'll throw it to you Sam first. What are your thoughts just on you know looking at a um the straits right? So we have huge huge benchmark things I think in my opinion with the straight up our moves these these things that Bitcoiners have talked about for a long time and these the turning point for being is it a risk asset. What are your guys thoughts when it comes to money for your enemies? And Greg and I talked about this just a few minutes ago. What happens when these enemies, whatever you know, people want to call them, start getting into Bitcoin? How do institutions, how are people going to be looking at this where there's probably going to be public push back? Uh, we're through this process where institutions are now in seemingly less risky, but now we're going to have nation states, we're going to have these other players coming in. So, what are your thoughts? We just kind of when you see, you know, we zoom out. >> Well, I think uh Bitcoin is money and just a tool. It's used by everybody. Um, I think the intentions of how you use that tool should be criticized, not the tool itself. And so, Bitcoin is used by enemies and friends. Bitcoin is for everybody. It it doesn't discriminate. And um, so it's really the intentions that we shouldn't criticize how people are using the tool. But I think what you're speaking to too is the risk profile of everything else both in the broader cryptocurrency space as well as traditional assets. the risk profile of everything else is deteriorating and that's causing investors to rerate Bitcoin in their minds a little bit. You know, I think about through the lens of Darwin actually. You know, it's not survival of the strongest, it's not survival of the fastest, it's survival of the fittest. And so, you have to ask yourself, what asset is best fit for this macro environment? And when you look out at the micro macro environment, you see rising uncertainty, you see geopolitical fragmentation, war, uh increased risk of capital controls, highly indebted governments, which rises the risk of currency debasement and financial repression. When you think about Bitcoin and the traits that make it special, you start to realize that perhaps this is the fittest asset in this environment that's going to be best be able to survive and even thrive. And so I think that's kind of flipping it on its head. It's not the the risk of Bitcoin as being less. It's actually the risk of everything else that is getting worse in investors minds. >> I'd like to add since the conflict in Iran erupted in February 28th, the price of Bitcoin took a short dip but rallied in the wake of that. Um we also had commodity spike, oil spike. Um but other risk assets, equities, gold, which has actually been performing quite well uh in the recent months, um interest rates, they went south. Uh and so Bitcoin was really kind of showing its use case in this global political in environment. Um, just back to Chris's report too, I like to tell investors, if you were to close your eyes and to imagine an asset and what financial properties it would have for a portfolio, it would have low correlation to other asset classes, high returns and low risk. Um, luckily we have two out of three of those. But that risk, that volatility is more than made up for in its return. And I think those financial properties as well as some of the technical properties are things that are increasingly being um appreciated by investors. So obviously there's a a big that you know that it's a tech stock, right? We see this all we've seen this for years, right? It's correlated to the NASDAQ and you know there's some truth to that in a way, right? Like we we we've all seen it. This is something that we still deal with today. So maybe I'll throw it right back to you, Greg, and just get your thoughts on this, you know, this decoupling. you know, we we we've seen these moments where everyone's kind of looking at it. It's like, oh, I think it's decoupling. I think it's decoupling. And then, you know, we kind of So, where do you think or maybe the things that have to happen in your eyes? And maybe we'll go down the line here and you guys can all give your thoughts on where what are you looking for as these signposts to really decouple and be this thing that we know it to be. It's the Bitcoin is unchanging. One Bitcoin equals one Bitcoin. How do people keep running back into the the burning building and getting out of out of the Bitcoin when they they have the real thing right there? So maybe we'll start with Greg and work our way down here. >> Yeah, I I like to uh tell investors that assets and Bitcoin particularly have no natural correlations to other factors. Those are given to them by the investors and what they do with their money and these investments as a reaction function to events that happen. Um and if you look at Bitcoin in particular uh its correlations with most other macro most macro factors and other asset classes essentially meander about zero uh throughout its history. The one exception uh was has been US equities tech equities for example and there really are sort of two distinct eras um and it really came on the wake of the monetary and fiscal stimulus that happened in the wake of in CO. So you have the BC era before CO and the AC uh after CO era and and and prior to CO Bitcoin's correlations with equities essentially zero uh and and since that time they've been at an elevated state um and there were two reaction functions as a result of this one you had monetary stimulus rates went lower money got printed and then you had fiscal stimulus you had deficits and spending um and then you had um higher inflation. So I I think that pushed money into uh into risk assets and and other corners of the uh investment sphere and it happened along with with Bitcoin and so you're seeing a seem to be a structurally higher um correlation with Bitcoin. Now even though the correlations with S&P rolling 90 days is 0.5.6 still has a nice diversifying principle um attached with it. Now, it's not zero or negatively correlated to S&P. Um, but it still gives you diversification benefits. Sam, you want to get your thoughts on just the correlation here when it breaks? >> Well, I think I mean the work that's Chris has done and others and Greg, I mean, if you look at long-term, Bitcoin does have very low to moderate correlation with pretty much every other asset class. I mean, the data is the data. you know, it's actually more closely correlated to different liquidity measures and Bitcoin has different risk factors and different drivers and that's a function of really supply and demand. Demand is both adoption trends and we're seeing very positive adoption trends right now at the institutional level, corporate level, individual level, regulatory level and then obviously on the supply side, Bitcoin's unique because it has a fixed supply that doesn't exist anywhere in the world. And I think there's like two data points that I had even the last two days which is I was on a panel with Brent Johnson who's a very respected market commentator. He he's into gold and he's a financial adviser and he's always been skeptical of Bitcoin and I asked him has your view shifted and he said well I no longer think it's going to zero and I think you're seeing investors start to think about the tail risks are starting to fade when it comes to Bitcoin and then we saw Paul Tudtor Jones uh today give a long form interview very rare but he spoke on Bitcoin and he said that um you know Bitcoin is unequivocally the best inflation hedge and it has the most valuable scarcity of of any other asset of anything. But he did mention two risks and he mentioned quantum risk and he mentioned the risk of some kind of large global cyber security attack. But those are both highly theoretical tale risks. And then when he mentioned gold's risk, he mentioned delilution that it you know supply increases about 1.7%. But that's structural. You know that's not theoretical that's happening. And so I think you're going to see the tail risk in investor's mind continue to fade as Bitcoin builds a track record, adoption continues to grow, investor access grows, and obviously it all depends on 21 million, you know, staying 21 million and remaining secure. So I think that's how I think about how investors are kind of shifting their mindset around this new asset. >> Yeah, to your point, Brandon, uh quite frankly, that is the most frustrating thing to me and and the the hardest question I get from institutional investors that we talk to. It's why is this thing so correlated right now? And to Sam's point, over the long term, it's not. But that doesn't help when you're in the room in the conversation and it's acting like a leverage tech stock or it's acting like uh gold on steroids or we were just talking about Cliff as the the the great quant uh AQR guy saying it's just extra beta. Why would you own this? And it's it's really frustrating. But one of the things I go back to is a very early article I read that unlocked a lot of understanding for me when I was first getting into Bitcoin. And it's an article called uh what does Bitcoin and the platypus have in common by Spencer Bogart. I don't know if any of you here have read this article. It's a great article. But you have to know the story about the platypus which is uh in the late I think 17th century European naturalists stumbled upon the platypus and I I think it was Australia. And if you've ever looked at the platypus it's a very odd animal. It's got the bill of a duck. It's got fur like a mammal, but it lays eggs. And I believe the male even has a venomous spur on one of its hind legs. And so they they sent sketches back to their European counterparts and they said, "This thing is a joke. It doesn't exist." They sent a pelt back. They still didn't believe him. They said, "This thing is the work of some skilled taxiderermis probably from Asia that sewed together different parts of an animal." And so of course they realized this thing actually lived and and and was real. Um but even after that for decades they argued about how to classify this scientifically and that's what Bitcoin constantly goes through. Is it a commodity? Is it a currency? Is it a payment system? Is it a platform? Argue about that. Now in the investment community we argue is it steroids or gold on steroids? Is it levered tech stocks? Is it this? And investors always want to put it into a box, but they don't open their mind and say, "Maybe this is a category creator. Maybe it's different." So to Sam's point, it has all of these characteristics that no other thing has. There's no other commodity on Earth whose supply will not change when the price changes. There's no other immutable um thing like it. And so until investors start to realize that, which I think they will and geopolitical and all these other things will help them realize that um they're going to tra treat treat it just like another asset on their screen and they're going to trade it how it's trading like it is during that week or month or quarter. But I personally think we'll get there where people will realize uh this is fundamentally different and it's going to start to trade differently. So I guess we'll keep waiting for that decoupling moment. >> Yeah. Sorry. Go ahead. I was going to say there are practical implementation questions from investors who are trying to deploy this. They need to classify this into which bucket am I taking this from. Um and I like to do a thought experiment of if you didn't know the word you didn't you didn't um uh presuppose any um knowledge about Bitcoin. You didn't even tell them that this was Bitcoin. you just gave them the properties of the technical uh economic uh risk and return properties and and allow them to naturally allocate to the the asset that way. Uh you'd get a much different um allocation profile than what you have today which is most people are still on zero. Um and I think because the word Bitcoin some has they have preconceived notions about this they come charged they have ideas about what it is and what it isn't. It doesn't allow for what would be an ideal allocation to this asset. >> Can I just No, it's interesting too because investors are looking at this and they're like, "This thing's a platypus, right? What is this?" And they're they're having trouble classifying it. What allocation bucket does Bitcoin fit in? And that's how institutional investors think. But what we're seeing in the Bitcoin community is actually the we're building products to actually meet them where they are to fit into their buckets with Bitcoin as the underlying asset supporting it. And that's what Michael Sailor with his preferred is doing at Orange BTC. We we have Bitcoin back equity now listed in B3. That gives investors better access to get Bitcoin exposure because maybe they have an equity domestic equity bucket and they don't have spot bitcoin, but they can, you know, buy our equity if they want exposure to Bitcoin. And so you're seeing uh companies start to build and develop products that meet investors where they are, which makes them feel more comfortable. Maybe they don't want the 4550 vow bitcoin. Maybe they want to turn turn that down. But it's all supported by Bitcoin and a lot of these products still increase demand for the underlying. So it's good for the ecosystem because not only does it drive demand for Bitcoin, but it provides better investor access. So I think you're seeing the community kind of help meet or kind of build to meet investors where they are so that they don't have to try to classify what a platypus is. Yeah, that's a great point, Sam. I I think that we're we're in this spot and we again we talked about this last week too in a little premeating where you you have this world where there's a cultural shift, you know, you know, dollars, right? The the world over, you know, everyone uses dollars, dollar reserve currency. We're so used to dollars. It's in it's in our it's in songs. It's in everything, right? So, we have this, you know, innate, you know, dollarm. I don't know what you want to call it really. Do you what do you guys see like going forward when you have the older generations where that wealth transfer is is going to come down over the next you know 5 10 15 20 years of this this wealth transfer like how do you see Bitcoin as this shifting asset go seeing you know going from seemingly risky now to a lot of people to okay the younger generation they're more technative you know they all these things are happening and then they have the wealth cuz right now a lot of younger generation doesn't have the wealth so we're seeing this weird gap where like we're at this weird bridge where it's like how do we get from the old world to this new world and and so you know maybe I'll start with you Chris just like where do you see the puck going in that sense of is there going to be in your eyes over the next you know 10 years we'll call next decade or so this real shift as this wealth transfers down and it kind of sunsets from the older generation and comes to the younger generation. >> Yeah it's one of the most obvious things that is talked about a lot but that doesn't make it any less underrated. Um I I don't think people are are fully grasping the size of this if you look at the actual numbers you put on your analyst hat. Um there's there's a huge amount of wealth of course in the older generations. I go to these traditional finance events. Uh I was at one a few months ago and one guy said to me, he said, "Yeah, there's there's just no way I'm putting money in in something like Bitcoin. I'd rather own art. I can hold art. I can see it. I can touch it." And I I thought that's very odd because you're you're you're debating or doubting the the in the subjective value of Bitcoin, but art is like one of the most subjective valued things in the world. I mean, the the canvas in ink is worth pennies, even if the art is valued at millions, right? So, I thought that was a little odd, but then I I took a step back. I'm like, well, I get it, right? And another um thing that helped me understand this was uh when companies like Microsoft went public, there were people that also said, "How in the world is this company going to be worth anything? It's code. It's just, you know, something ones and digits digital. How can something that's so ephemeral and digital be worth so much money?" Now, of course, it's like one of the top five most valuable companies in the world. And and it seems obvious to us today, and I think it'll seem obvious to us tomorrow. I've got uh young kids. They're digitally native. Of course, I'm millennial, so I've kind of brided that gap. And it's going to be no problem whatsoever for them to get their heads around owning uh something of of digital value and that has uh true digital scarcity in my opinion. >> Yeah, you guys, I'd love your thoughts on this, too. >> No, I just um I mean, it's kind of a dark quote, but it's that quote of like progress happens one funeral at a time, right? And like I think the the demographic ownership of Bitcoin is one of the most bullish things uh period because it's really hard for critics to push back on that when you see who's owning this, who's adopting it. Makes sense. Young people are digitally native. They understand this. I mean, anybody born after 2009 have never lived in a world that, you know, digital money and Bitcoin uh didn't exist. You know, it's what they've known. And so that trend, the wealth transfer that happens as uh the elderly pass away and transfer their wealth over, what do you think they're going to buy? And it goes back to what I said before. What asset is best fit for this environment and the market awareness of in the younger generation of what this asset is is much higher than u the older generations who hold a significant amount of wealth today. But that will change. You know, demographics happen, people do pass away. And so it's one of the bullish kind of secular trends that I see in Bitcoin that's really difficult for some kind of critic to to push back on. >> I think a bit about the socio and economic divide that is occurring uh and and seemingly widening uh over over time. The wealthy and the have nots are splitting further and further apart. And this is causing all sorts of ripples in politics. for example, growing populism on the right, growing populism uh on the left. Um I feel as though there's an increasing belief that the boomers have made all the wealth and they're pulled they're pulling the ladder up and the younger generation no longer see, hard work, effort, um some luck getting uh getting ahead in in society. it's difficult to afford a new home. And those that's that American dream is increasingly out out of reach. And I think about an asset like Bitcoin that has some of these financial properties that can transform uh these financial outcomes for investors. And this is a repository for the society's inability to not solve these intractable problems. And it Bitcoin is a repository for that. And that's not changing. >> I just add one thing. I just Yes, younger people tend to adopt Bitcoin more so today than the older generations, but that doesn't mean that everybody doesn't need u Bitcoin because everyone suffers from currency debasement today across the board. And I actually think about um you know retirees who have more are on a fixed income and that the options available to them given the rate of currency debasement today. Um they really need to think about how to protect themselves in this new macro regime that's very different than the last 30 40 years where you can just kind of set it and forget it in this like 6040 you know target date. you know, mutual funds, you know, you really got to think differently about how you add diversification, real diversification into portfolio. And that goes back to, you know, Chris's work in his paper. You know, Bitcoin provides that diversification and that protection against the basement. And older generations need it just as much as the younger generations. So with the you know just over six minutes we have left here we can touch on this this other thing that's out there too which is stable coins and the perceive this you know again people see Bitcoin this is why this this session about the volatility and the riskiness that people perceive of Bitcoin you have a lot of people going to stable coins obviously how do you guys see and you know I love your thoughts on you know kind of last thoughts with everything here uh as we wrap here maybe you know two minutes each guy what have you so how do you I see stable coins playing into this because you you have this world where the dollar's there. It's entrenched obviously. So people want stable coins all around the world. You have the UBI talk, all these things coming here in America. What are we going to do with AI, all this all this talk, right? People are very scared. We talked about market uncertainty. So where do you guys see this when you zoom way out with stable coins, Bitcoin, how these things fit together? Um I would I would love all your guys' thoughts uh on these last couple things. So Greg, you want to you want to get going? I I view stable coins as a bit orthogonal to to Bitcoin. Obviously, they're issu there's a centralized issuer um who is holding cash or investments on one side of its balance sheet and has a liability of issuing um tokens on the other side because these are essentially all US dollar denominated. They're inherit they're inheriting all of the um financial properties of of the US dollar. um their exponential growth um and speaks to the to the demand for the US dollar on a blockchain though um there are still investors who don't have access to currencies that um they can trust um and so for them stable coins offer that that option even though they're inheriting the properties of of the US dollar and I I I I think it's It's a little bit of a Trojan horse into the space. Um, but it is still very much orthogonal versus Bitcoin is open permissionless um, technology. Sam, before you go quick, it'll go you Sam. Do you think that uh, throw this in there too people are going to go to stable coins because of the dollar like we just mentioned, right? And Greg talked about, but do you think it's going to train people as well? Hey, how to use wallets, how to use exchanges, how to go down this path and you still have the contrast of seeing Bitcoin and it's, hey, if I'm in stable coins, it's still melting, still the dollar. So anyway, yeah, I love you, Grace. >> Yeah, I mean it'll definitely get more people familiar with just using things like wallets. And I think look, I mean, you try sending a wire, it's so archaic, it's so slow, it's so frustrating. I mean, there's no doubt that stable coins improve some of the inefficiencies of sending dollars around the world and will improve dollar access. It's all relative. If I'm in a country where the currency is really poorly mis it's mismanaged then yeah dollars look great but to quote my friend Jeff Booth there's nothing stable about a stable coin because it doesn't protect against debasement. I sound like a break broken record. Um it's still it's a fancy rapper that still has the um questionable monetary policy let's say um in it. And and also like we saw just last week uh Tether freeze what over $300 million um in response to violations of the sanctions. And whether you agree with that or not, it really just shows what's possible u with a stable coin and should wake people up to okay well could this be used against me? you know, a a law-abiding citizen. You know, it's it's very uh it's sometimes scary to think about a centralized company that has that ability to not just censor and seize, but also to surveil. And so, these are the things that when you look at stable coins in contrast to Bitcoin, I think it it it shines a light on some of the things that makes Bitcoin special. And I think you're going to see stable coins and Bitcoin continue to rise uh from here. US-based stable coins. Yeah. And and again, I think that's important just to reiterate, Sam, like again, that's I think it's just trying to acknowledge that stable coins are here and people are going to use them, right? It's just the game theory of people are going to them, not advocating for them and any, you know, by any means, right? So, I think that's well said, Sam. Chris, yeah, >> I was just going to say I'm in the camp of what you said previously, Brandon, about uh stable coins making people comfortable with using the infrastructure, the wallets, and opening that first door of like, oh, this is a protocol. this is uh how the world can work more seamlessly because we're so used to our current system. So there's huge product market fit for countries that have high inflation, everything, but even just in the US for example, my kids had a lemonade stand the other day and uh of course they accepted cash, but nobody has cash, but they all have their phones. So we'd ask like, "Oh, do you you have zel? Do you have PayPal? Do you have Venmo? Do you have Cash App?" We had to go through like some of these people like four different apps to see which ones we had the same. I mean, do do you realize how ridiculous that is in in our day and age? Like, you wouldn't say, "Oh, do you have a certain type of so I can call you or send you a text message or we all have to be on the same email provider to send emails?" No, email is just email. It's protocol, right? And so, if we get to the point where people are just sending stable coins, it doesn't matter what app they have, it doesn't matter which ones they use, what phone they have, hopefully that can unlock people's brains into showing them this is a protocol. And then maybe we can get to Bitcoin. But I'm a little, you know, I'm a little bit with Greg here. It's it's a little bit of a more of a jump um that they're all a sudden going to understand Bitcoin as money coming from stable coins. But it it's a good start and and there's obviously a huge product market fit there for for all the the usage and and rise we've seen in it. >> You guys, you know, we have, you know, a minute here. Um are you guys a believer with Bitcoin being I know like Dr. Jeff Ross has talked about this over the years uh with the four stages of money you know that collectible phase Bitcoin goes through kind of going through that now maybe ending it maybe it's ended store value phase then you have the medium exchange unit of account uh so maybe with the remaining few seconds do you guys are you guys kind of a believer of that maybe over the next and he and he says the next decade or two is going to take another decade or two to get through those last few phases where do you you know Greg maybe where do you see that quick I I in the early days Bitcoin had a lot of ideas about what it could and what it should be and And now we're really narrowing down on on how to pitch it and analogize it. Um, and I think that's good for investors. Um, what that ends up looking like, is it an investment or is it used as money? That's still TBD. Um, the fixed supply property makes it more suitable as an investment than as a as a medium of exchange. Um, but I'm still open to to all these options. Sam, >> I mean, it always made sense to me that, you know, people would have to adopt it as a store of value. too broadly first before they begin using it as a medium of exchange. And as it grew as a store of a value, the volatility would fall, which again would make it more suitable to be used as a medium of exchange. Uh but at the same time, Bitcoin is being adopted in every which way all at once depending on where you are in your jurisdiction. And um you know, that's one of the beauties of Bitcoin. It's a technology that people come to it for very different reasons, for their own personal reasons. you know, if I'm in uh Latin America and I need to send remittances cheaply and I'm afraid of capital controls or something like I I am going to be using Bitcoin as a medium of exchange. If I'm in the US, it's probably more about store value and portfolio diversification and things like this. Like with any revolutionary technology, people come to it for different reasons and there's a ton of different use cases just like the internet, uh just like electricity, you know, Bitcoin's no different. you can it's going to be adopted in every which way all at once. >> I agree with all of that. The only thing I'll add as as an extra is the unit of account is usually thought of as like oh when do we start keeping our books and records and we price things in Bitcoin as the final stage. But I think one one twist you can think about is when do people start internally thinking of Bitcoin's rate of return as their hurdle rate for their own investments and their business decisions because that's to me the real unit of account. Can you outpace uh inflation is the real question. So people think they're making a lot of money nominally. They need to start pricing their returns in uh Bitcoin. >> That's a superpower by the way. Start pricing things in Bitcoin. That is that is thank you so much guys. Uh again Brandon Gentily Bitcoin content creator we got Greg Celaro Naidig Sam Callahan Orange BTC and Chris Kyper Fidelity Digital Assets. Thank you so much guys. >> Thank you. >> Every year this community comes together to celebrate, to debate, to build what comes next. And every year the stage gets bigger. Sound money center stage. So where do you go to celebrate the next chapter in Bitcoin history? You come home. Nashville. July 2027.