Bitcoin’s Setup Just Got Much More Bullish w/ David Duong

**David Duong** (0:00)
And the overall macro picture is actually a lot more favorable than people are giving credit for.

**John Gill** (0:04)
Bitcoin has been showing some strength this week, but it appears to be stalling out. Is the bottom in, or is this the beginning of another leg down? Hello and welcome to The Milk Road Show, the podcast that knows that meme coins took over the Robinhood chain faster than transaction speeds on Solana. And that's pretty fast. I'm your host, John Gill, and today is Thursday, July 16th, and today we are joined by David Duong. David is the former head of institutional research for Coinbase, one of the best analysts in all of crypto and a long time front of the show here at Milk Road. David is going to catch us up on his latest thoughts on the crypto markets and give us a ton of alpha on everything that's going on in crypto today. So that sounds good to you. Make sure you like and subscribe, share this episode with somebody who's going to enjoy it. Today's episode is brought to you by BitGet, stocks 2 with real liquidity, real dividends, and Securitize, the regulated rails for tokenization. Now without further ado, welcome back to The Milk Road Show. David, it's been a while, man. How have you been?

**David Duong** (0:56)
Hey, thanks, John. I'm doing pretty well.
Glad to be back.

**John Gill** (1:01)
Well, I'm glad to have you back. I think you took some much needed time away, but our audience always loves you, so I'm really glad to have you back on the show.
David, I wanted to start with a conversation about inflation because we got the June CPI data, and it showed that the rate of inflation is cooling much faster than most people were expecting. It seems like a lot of markets caught a tailwind for this. I want to get your reaction to this and how you think this sets up Bitcoin going deeper into the summer here.

**David Duong** (1:27)
Yeah.
First of all, this captures the June data. I think people are already looking ahead to the current escalation intentions with Iran again and the impact on oil and whether that's going to feed back into inflation. Now, I don't really buy that. I didn't buy it when we were seeing that swing back to the forehand on inflation and I don't buy it now that we're like, all right, let's just chase this and let's say inflation is coming back down.
I look at the secular trends for the stuff. I kind of look through a lot of the cyclical noise, which is what I think the energy prices represent. And when I think about secular, what really impacts inflation? What really impacts prices in the US? That's mostly where you live. For example, shelter costs are features, one of the most important factors you need to look at if you're really trying to understand where is this trending. And granted, you have to keep in mind that there are these psychological effects of like things cost too damn much, which is why there's affordability concerns, which is why this is going to feature very heavily in the elections. And that's separate from what the data tells us. I'm here to study the data, and I'm here to tell you what the Fed is looking at. And the Fed will look at it and say, like, first of all, we don't even care about headline inflation. We care about core.
Not only that, we don't really care about the core CPI. We care about the core PCE.
If you're looking at that data, like, there really doesn't seem like the Fed has a lot to go on in order to justify another hike. Now, let's play devil's advocate. Let's say, like, okay, let's say oil prices, gas, too sticky, and eventually forces their hand. Well, then we look abroad and look at the analogs of what other central banks have done. What has the ECB done, for example? What does the Bank of England do? What does the Bank of Canada do? And in the case of, like, the ECB, at least, like, they had one hike and then they paused. And why do they do that? They do that because they were very clear, this is an insurance hike. So at worst, like, we should not be pricing in, like, three hikes in the US. Like, if you price one, I accept that as reasonable. I don't even think they're going to get that. And if it was, that would be an insurance hike. And what I care about is, like, if I look at that, is that bad for markets? Like, if they just do one hike and then say they stop for the next five meetings, it's fine. The market will look through that and just be like, all right, cool. Everything's fine. Like, what I care about is the overall macro picture. And the overall macro picture is actually a lot more favorable than people are giving me credit for.