Jeff Park on Why the 60/40 Portfolio Is Already Over

**Robbie** (0:00)
Jeff, please. Great to meet you, man.

**Jeff Park** (0:02)
Happy to be here. Thanks for accommodating me. Cheers.

**Robbie** (0:06)
Thanks for joining. Cheers, Jeff.

**Jeff Park** (0:08)
Thanks for having me.

**Andy** (0:08)
Absolutely.

**Robbie** (0:09)
What's going on, man? How's the conference treating you?

**Jeff Park** (0:12)
You know, this is, I think, the biggest turnout I've ever seen for DAS New York, and I'm a New Yorker, so I've seen all the DASs throughout the years.

**Robbie** (0:20)
Everyone's got the sport coats on, or the suits on.

**Andy** (0:23)
A lot of people, it's their first crypto conference.

**Jeff Park** (0:26)
You guys have suits on, so this is all very uneasy for me now. There's too many suits in this room.

**Robbie** (0:31)
Jeff, man, we haven't talked much about on this show about STRC. And I don't know if there's anyone better than you to talk about it. There is so much misinformation out there about whether it's going to blow up the sustainability of Sailor's strategy. He also recently just pushed out a new update and kind of a new kind of product evolution there. What's your honest take on STRC and on Sailor's current accumulation strategy? How are you going to viewing it as part of the Bitcoin macro lens?

**Jeff Park** (1:03)
Sure. Well, let's go right into it. STRC is complex because it doesn't fit into a box very nicely. And as you know, many things in crypto don't fit nicely into boxes, which begets a certain amount of uncertainty, but excitement and STRC is one of them. At a high level, I do think it has found product market fit in the sense that there are investors who want to earn high yield with the understanding that that yield could be collateralized by hard assets. And STRC is a medium that permits that possibility.
At the same time, I think we have to acknowledge that it's highly unusual as a prefectly structure that has existed in the capital market's environment. And so there are rightfully, I think, concerns as to the sustainability of those underlying strategies. So, for example, I know it's popular to call these digital credits, but preferred equities are not credit instruments in the eyes of the court, in the eyes of bankruptcy. So, even though there's a credit-like element because it pays a coupon, credit and the relationship that it represents implies a sense of seniority versus junior investors and shareholders of a company and a capital structure upon the event of a bankruptcy. Preferred equities have slightly different protections when it comes to that as a covenant than true credit instruments would. And I think, rightfully, some people may ask questions about those dynamics. This is not to say that STRC therefore is an inferior product. Quite the contrary, I think STRC is uniquely purpose-built for exactly what Sailor wants to do which is Bitcoin accumulation at a lower cost of capital. And the nice thing about these prep securities is that you can do things that you can't do with traditional credit instruments like having a variable interest rate, like having the ability to pick and defer, like the ability to defer payments, and all these things, while they're not kind of black and white favorable constraints of a credit instrument, can long term be actually good for Bitcoin accumulation. So I think we'll find out in the future based on kind of the inlays that it makes with new investors. But I think the headline news is this. People like it. People like it. People like getting paid 10 plus percent on Bitcoin related risks. And I understand that to be a positive future for the ecosystem.

**Robbie** (3:28)
So it's ProCap versus Strategy, race to accumulate as much Bitcoin as possible. Sailor's got a little bit of the lead here, but we cannot fade Jeff here. We cannot fade Jeff.

**Jeff Park** (3:37)
I appreciate that.

**Andy** (3:39)
I'm just curious where you think Bitcoin sits in the broad scope of a portfolio these days. Obviously, we saw the run up at gold, as that reacted to global uncertainty. The thesis was that Bitcoin was a better gold. How do you think this plays out over the coming months?

**Jeff Park** (3:54)
Well, I think in the coming months, the uncertainty for global macro is as high as it has ever been. I believe the World Uncertainty Index hit a local high, which is pretty astounding and not surprising perhaps based on kind of the news flow that we're all witnessing today. In light of that, I think Bitcoin has been fairly heroic. You may know that Bitcoin actually had its local bottom on February 28th upon the announcement of the war with Iran, and ever since, it's been kind of steadying higher.