How Bitcoin Is Both a Risk Asset and a Hedge Against Debasement

**Steven Ehrlich** (0:01)
Hi, everyone. Welcome to our episode of Bits and Bips the Interview. My name is Steve Ehrlich, Head of Research at SharpLink and also your host. We've got a lot to get to today, but before we begin, let's take a brief moment to hear from some of the sponsors who make this show possible.

**SPEAKER_2** (0:18)
Multichain Advisors is an emerging technology growth firm that has helped create $50-plus billion in enterprise value for 80-plus clients over the past four years. They are the partner to help navigate markets. Build real traction today at multichainadv.com.
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**Steven Ehrlich** (1:04)
So one quick disclosure before we begin. Nothing that you hear on the show is financial or investment advice. Everything is for informational purposes only. For full disclosures, please check out unchainedcrypto.com/bits and Bits. Now I'm very pleased to bring in my guest for today, Jim Ferraioli, the Director of Crypto Strategy and Research at Charles Schwab. So welcome, Jim.

**Jim Ferraioli** (1:29)
Hey, Steve. Good to be here today.

**Steven Ehrlich** (1:32)
Yeah. Great to have you too. You've got a really extensive background in the crypto space and traditional equities industry. So it's going to be a lot of use today. We're going to be discussing everything from how the Iran conflict and fears of heightened inflation are impacting crypto markets, what it means for things like the debasement trade, and some of the implications for, I think, some of the formulas and frameworks that you've put forward in recent weeks on how you and other traditional financial entities are valuing crypto assets. So it's time to get into it. But before we do, I'd like to just give you a brief moment to introduce yourself to the audience.

**Jim Ferraioli** (2:09)
Sure. So I've been covering crypto at large financial institutions since 2020 My background is in equities formally.
I joined Schwab in August of last year to build out a dedicated crypto research product for them. But I have a bit of a different perspective from a traditional finance background, in that I was an equity investor. I also worked on an equities trading desk briefly. And prior to that, I had some experience as a financial advisor. And so I really like to combine what's going on in the macro with what's going on with on-chain positioning, and then ultimately looking at the fundamentals of different blockchains. And so again, it kind of lends itself to that equities background. A lot of people in the traditional finance space, they view it purely from a macro perspective. So maybe taking a traditional macro model and plugging in Bitcoin and Ether and seeing kind of where the pieces lie. So again, just having a bit of a different background there, it's a different perspective. But ultimately, that's what makes a market. There's lots of different ways to view any asset. And that's why there's always someone buying and someone selling different ways of looking at them.

**Steven Ehrlich** (3:27)
Yeah, terrific. And we always like different and interesting and diverse perspectives. And you kind of bring all of that. So let's get right into it. A lot of your research is focused on trying to build out fundamental models, finding those core drivers of value for assets. But as you've pointed out in a number of your reports, crypto is very much still a momentum play and a highly correlated one at that. So I'd like to just kind of begin by asking, what is your take of what you're seeing right now with the price of Bitcoin or other assets are ping ponging with whatever is happening to the price of oil and market sentiment based on the last thing that President Trump said? How are you sort of approaching this particular period of time?

**Jim Ferraioli** (4:10)
So I view the entire crypto asset class as a risk asset.
There's a very narrow set of circumstances where it's a risk free asset or a safe haven. And if you go back to spring of 2023, when you had several large financial institutions, experienced bank runs, you saw a Bitcoin rally. That's the very narrow area where it's worked as a safe haven. But traditionally, it is a risk asset. When you have a risk off day in the market and you have equities selling off, more often than not, you're going to see the crypto market selling off. And so I think that makes sense.