Bitcoin's "Coiled Spring" Jump, Clarity Act Pivot Point & Miners' Data Center Move

putting its massive Bitcoin bet back in the green. But now to talk more about, of course, the move in strategy as well as just the broader crypto space, we're joined by Sam Callahan, director of Bitcoin strategy at all right now. So as far as what we're seeing as far as just overall assessment of Bitcoin and of course, the momentum that we've seen come back into play this week, I mean, how are you assessing the appetite for risk assets as well as just the way some of these names like strategy of course have benefited. Yeah. And thanks for having me back on. It's been a volatile week, but everyone's celebrating this time as volatility has returned back to the upside. And I think this is related to what's occurred at the Treasury over the last week, when they're doubling the amount of share buybacks. And really what this points to is the lack of sustainability of the fiscal outlook and the currency debasement trade was really popular in the earlier this year. And then I kind of took some of the spotlight away from that. So Bitcoin and gold became out of favor. But the important point to make is that it wasn't a trade. This debasement was structural, meaning that it's related to the fact that we have $40 trillion of debt. They can't afford to have the long end of the yield curve rise because interest expense will explode. Interest expense is already the third line item this year. Fiscal deficits are on track to exceed last year, it's supposed to be 2.1 trillion. And investors are starting to ask questions. And they're looking at alternatives and hard assets because when they come out and say, hey, we're going to go to Treasury buybacks, really what they're saying is we're going to sacrifice the currency. And you saw that in the dollar move in response to that news. And you saw that with the moves of Bitcoin and gold. So people are returning back to hard assets that will benefit from an environment of currency debasement. Yeah. And I think that's kind of the long term shift, right? That's the big picture story. But from a trading story, you know, kind of the day to day watching Bitcoin, you know, sort of a, of, of a bystander, someone off to the side as opposed to someone like yourself who's maybe in this business and is building a company around it. This has always seemed like an asset that the upside volatility like feeds on itself. And it becomes a part of the discussion. And then it, you know, it feeds on itself more. It's like a true FOMO asset. And I wonder how much the fact that we've seen volatility really come down. And, you know, your more traditional financial risk assets like equities has helped drive activity back towards crypto at the same time that some of these big picture debasement sort of anti dollar and and fiat currency trades are working as well. Yeah. I mean I think it points to the fact that Bitcoin is actually in a in a period where it had very low volatility compared to its historical volatility. So in very much it was like a coiled spring. And it was kind of waiting for a catalyst. And you saw that with the news of betterment coming out this week. But it was really there was a lot of apathy. Sentiment was low, and it was kind of ready to explode one way or the other. And so we saw it go to the upside here. But, you know, Bitcoin's volatility is part of what makes it attractive for investors. It's not necessarily a bad thing. It's just about managing properly with position sizing. But the volatility has helped brings eyeballs help brings traders into the mix. Bitcoin crossed a lot of key technical levels like it's simple day 200 day moving average across that. That'll get traders involved as it gains momentum. That'll bring other traders involved as well. And it kind of starts to feed on itself. Right. And then like I said before, the long term value proposition has never been stronger. When you look out at, hey, how do I diversify against some of these fiat currency risks compared to, say, equities or bonds? How does it fit into a portfolio? You got the traders getting into the mix. Some of the long term value investors will get into the mix here as they see it down. You know 40% off its all time high. So it starts to feed on itself right. They rotate out from these like AI stocks that had its moment. And now they're kind of coming back to Bitcoin because it's been out of favor a lot. And that's really how markets work. Right? Okay. And so talk to me a bit more about the Clarity Act, because obviously that was the huge driver of some of the renewed optimism this week. But I've heard varying opinions about what obviously regulatory clarity could actually mean for the space, if it will be like the rising tide that lifts all boats, or we'll see certain individual stories perhaps propel while others maybe lag. And so as far as just institutional participation from this increased regulation right now that's expected at least. How do you think through the Clarity Act? Yeah. And so there was a lot of optimism about getting the Clarity Act signed before Congress went into recess. But now it's been delayed. Hopefully, that they can get that across the finish line. But I think what we'll find this week is that the SEC came out with some new rules. The CFTC is working together to put out some more clear frameworks. And so we'll get regulatory clarity one way or another without the Clarity Act. If it doesn't pass for some reason, you know, when it comes back to vote. So I think that's the important part to take away here is that the regulators are kind of changing how they approach this digital asset industry. They're creating clearer rules that help kind of foster innovation, help bring it back to the United States, where you can build here and not have to worry about some kind of wells notice coming at you just because you're building in this brand new asset class. And so I think we'll get regulatory clarity regardless. And hopefully they can get clarity over the finish line. But I think it's positive either way. And I think institutional investors will see this as a positive given the updates from the SEC and the CFTC over the last couple of weeks. Sam, last question I have for you. It seems like there's now new competition in in this space where before, you know, Bitcoin miners, they were building up compute, they were using electricity. It was getting more expensive because it was getting harder. But now those same resources are almost, almost entirely being diverted towards AI data centers. How does that complicate the story in terms of bringing more and more Bitcoin supply online? Yeah. Well, the Bitcoin network works in a certain way where the hash rate can go up and down, but they have something called a difficulty adjustment, which basically means that the miners who stay on the network become more profitable. And so there'll never be miners that don't find a use for running electricity to mine Bitcoin. What we'll see here is though, is a shift of who's mining. You know, in the past years it's been large public companies, mainly denominated in the US who have been mining. But now you're going to see that hash rate become more distributed. It's going to go to energy sources that perhaps AI data centers can't access. So really stranded remote energy resources, which is actually a good thing for the health of the network long term, for the hash rate to be distributed across different energy sources across jurisdictions. So there might be some churn here where some miners will turn off and go to AI. But in the long run, it's actually healthy for the network for it to be more distributed across the globe. Okay. And I like that. A good place to leave it a point of optimism, but really appreciate it and