Conversation with Jeff Park: We are in a bear market, quantitative easing is no longer effective, and silver like altcoins will crash.

“Positive correlation Bitcoin” might actually be the truly important direction for the future, where when interest rates rise, Bitcoin will also tend to increase.

整理 & 编译：深潮TechFlow

Guest: Jeff Park, Partner and CIO at ProCap Financial

Host: Anthony Pompliano

Podcast source: Anthony Pompliano

Original title: Why the Bitcoin Narrative Is Shifting Right Now

Air date: February 5, 2026

Key Takeaways

Jeff Park is a partner and CIO at ProCap Financial. In this discussion, we explore Bitcoin’s recent price correction, analyze whether the market has truly entered a bear phase, and discuss the current interest rate environment and the role of the Federal Reserve in the economy. We also talk about the potential nomination of Kevin Warsh as Fed Chair, Jeff’s outlook on the precious metals market, and his warning about a category of assets that investors should avoid in the future.

Highlights and Insights

• We are in a bear market. Even if policies become more accommodative, it may not be enough to push us into a bull market.
• If you’ve already made good gains from silver investments, now might be the time to shift your funds into Bitcoin.
• “Positive correlation Bitcoin” might actually be the truly important direction for the future—when interest rates rise, Bitcoin could also rise accordingly.
• Our initial choice of Bitcoin was based on the belief that scarcity can solve issues caused by manipulated money supplies.
• I remain very optimistic about Bitcoin’s future, mainly because I believe government roles will become more centralized, and Bitcoin will once again serve as the ultimate hedge against such systems.
• The Fed Chair should not be a socialist or nationalist; we need a technically skilled official who is also pragmatic. Warsh and Bessant happen to possess these qualities.
• If interest rate cuts and increased liquidity occur in the future, I think the price volatility in the precious metals market could become even more intense.
• The outlook for silver is not optimistic. Silver’s performance in the metals market is very similar to how altcoins perform in the cryptocurrency market.
• Kevin Warsh firmly believes that blockchain technology is not magic but a tool capable of solving many practical problems and improving efficiency. Bitcoin is an important part of this technological culture.

Is Bitcoin’s Sell-Off Sustainable?

Anthony Pompliano:

Jeff, Bitcoin has been declining recently. I personally think the market might continue to fluctuate or even go lower, and we may have already entered a bear market. A 40% drop in Bitcoin has attracted a lot of attention. What’s your view? Do you think we are in a bear market now? Is the decline sustainable?

Jeff Park:

I believe we are indeed in a bear market, and it has been ongoing for some time. One important point to remember is that, in the past, people liked to see Bitcoin as a hedge, believing it was positively correlated with global liquidity—that is, when global liquidity increases, Bitcoin tends to benefit. However, the reality is that this relationship has long been broken.

In the crypto space, we often tend to think that history repeats itself simply. This idea is actually a compromise of behavioral biases, such as believing altcoins always follow Bitcoin’s lead, or trusting the so-called “four-year cycle,” or assuming quantitative easing (QE) and low interest rates will always favor Bitcoin. But the world is constantly changing, and many things are different from the past. Now, an important hypothesis we need to revisit is: does QE, global liquidity expansion, and low interest rates truly benefit Bitcoin? Although this was true in previous cycles, the current situation might be different.

Currently, global liquidity is actually steadily increasing. According to data tracked by Michael Howell, by 2025, global liquidity will reach approximately $170 trillion, sourced from China and the US, and may accelerate further. We can see this trend in the general rise of asset prices, such as a strong rebound in metals markets and corporate credit spreads reaching historic lows. This suggests Bitcoin should be participating in this rally, but it isn’t, indicating some fundamental mechanisms may have changed. Therefore, I believe we are indeed in a bear market, possibly already started around mid-2025, when the Fed’s balance sheet began shrinking, especially as the Treasury started rebuilding the General Account (TGA).

Looking ahead, we may need to accept a reality: even if policies become more accommodative, it might not be enough to push us into a bull market. However, this makes me somewhat optimistic about potential catalysts for Bitcoin’s future rise.

I’ve previously mentioned the concepts of “negatively correlated Bitcoin” and “positively correlated Bitcoin.” The familiar “negatively correlated Bitcoin” refers to a scenario where, under low interest rates and loose policies, risk assets rise in price, and Bitcoin also rises. But there’s also a possibility of “positively correlated Bitcoin,” which I see as the ultimate goal—that when interest rates rise, Bitcoin will also rise accordingly. This scenario is completely opposite to QE theory, based on questioning the reliability of risk-free rates. In this case, we are essentially saying that risk-free rates are no longer risk-free, and dollar hegemony is no longer absolute; we can’t price yields the way we used to. This calls for a new model, such as a basket of commodities-based currency, and Bitcoin could serve as this hedge.

Therefore, I believe this “positively correlated Bitcoin” might actually be the truly important direction for the future. The current monetary supply and financial system are already problematic, and we know that the cooperation between the Fed and the Treasury isn’t enough to push the national security agenda forward. All of this makes me think that, to lift Bitcoin out of its current slump, we may need to abandon old assumptions and return to Bitcoin’s fundamental value—we initially chose Bitcoin because we believed scarcity could solve the problem of manipulated money supplies. So, even as global liquidity increases, it might not be good for Bitcoin.

Fed vs. White House: Is Bitcoin Forward-Looking or Backward-Looking?

Anthony Pompliano:

Jeff, I think there are two different perspectives to analyze the current economic situation.

First, historically, we’ve believed that monetary policy is the main driver of the economy and asset prices. However, now the current US government seems to be trying to wrest control of the economy from the Fed. They are doing this through deregulation, tax cuts, tariffs, and efforts to weaken the dollar. At the same time, they are leveraging AI development to boost growth. Meanwhile, the Fed appears somewhat passive—whether voluntarily or involuntarily—they seem to be trying to understand the various trends in the economy and how to respond.

Therefore, the economy now seems to be in a dynamic power balance between the Fed and the White House. We need to figure out: who is actually leading the direction of economic policy— the Fed or the White House?

Second, I also wonder, is Bitcoin’s market behavior more forward-looking, or does it mainly reflect current or past economic conditions? When you mentioned Bitcoin holders’ psychology, you described them as “driving while only looking in the rearview mirror,” believing that the past four-year cycle will repeat, so there’s no need to look ahead—just follow past patterns. But I think your view is more like reminding us to “look through the windshield into the future,” which might be a better way to analyze.

So, the question is: Is Bitcoin’s performance based on current economic conditions, or is it predicting future developments?** For example, in 2020, many investors bought Bitcoin and gold because they anticipated inflation. The market was forward-looking. If Bitcoin is now declining, does that mean deflation risks are greater? Or is it warning us of other potential problems? How do you see the balance of power between the Fed and the White House? And is Bitcoin looking into the future or reviewing the past? How should we interpret current price movements in a broader context?

Jeff Park:

That’s a great question. I have an interesting concept I call “Peace-time Bitcoin” versus “War-time Bitcoin.” In times of peace and prosperity, we expect the monetary system to operate normally, and investment frameworks to function in traditional ways. That’s “peace-time Bitcoin,” which is more linked to inflation and used as a hedge against inflation.

But “war-time Bitcoin” is entirely different. During “war,” the main driver of economic growth is no longer monetary policy but industrial, military, and fiscal policies combined. This has happened historically—during crises involving democracies and more authoritarian governments, monetary policy often takes a backseat to power struggles.

Therefore, your point about Bitcoin’s future positioning is correct. Part of the reason is that during the Trump administration, the world seemed to become more centralized. In the past, we admired decentralization, resource dispersal, and checks and balances as virtues, and Bitcoin and cryptocurrencies embodied that idea. However, a close look at recent US crypto policies shows a trend toward greater centralization. For example, stablecoins are bringing banks into yield centralization; tokenization is increasingly used for stocks rather than long-tail assets; and Trump’s own administration has a centralized character. All these factors give Bitcoin a kind of “centralized energy.”

Bitcoin’s value has always been about decentralization and censorship resistance; it represents a “free currency.” US investors have many other options, like silver, metals, AI-themed investments, etc. The real need for Bitcoin comes from those living under oppression, facing capital controls. If you believe the future world will be more divided, chaotic, and even more capital-controlled, then Bitcoin’s importance will be even more pronounced.

So, I remain very optimistic about Bitcoin’s future, mainly because I think government roles will become more centralized, and Bitcoin will once again serve as the ultimate hedge against such systems.

Kevin Warsh and the Future of the Fed

Anthony Pompliano:

You mentioned Kevin Warsh, who is clearly a nominee for the new Fed Chair. He has made some very positive comments about Bitcoin, not seeing it as competing with the dollar but as having a unique role in investment portfolios. What do you think about his potential as Fed Chair? How might he influence Bitcoin’s development in the future?

Jeff Park:

Honestly, I really admire Kevin because I see him as a deeply understanding expert of how things work. He knows sometimes you need to break existing models to make progress, and he understands that only by truly diagnosing the root causes can you find solutions. You can’t change just for the sake of change; those who truly understand the issues are often reluctant to change easily, and having this innovative mindset takes great courage—Kevin has this trait.

Moreover, he is an excellent technical expert. I remember a conversation with him where he expressed enthusiasm for cryptocurrencies. He mentioned that many “hypocrites” believe technology is some kind of magic, but they don’t understand its essence—they blindly bet on it without proper reasons. In contrast, Kevin firmly believes that blockchain is not magic but a tool capable of solving many practical problems and improving efficiency. Bitcoin is an important part of this technological culture.

This is crucial because many technologists don’t truly understand how the technology works. For them, imagining technological innovation is counterintuitive. For example, when we talk about productivity growth, the Fed might not realize that AI is causing deflationary effects. This knowledge gap exists because many people can’t think as far ahead as Kevin Warsh. So I see him primarily as a technical expert, which is especially important today. I believe we need more leaders with this kind of technical foresight in monetary policy.

Additionally, Kevin has extensive experience at the Fed. Studying his past actions shows that he genuinely believes in the value of the Fed as an institution. He’s not someone advocating to end the Fed’s independence, but he understands why its independence is challenged and knows how to reshape it to regain public trust. He once said something that impressed me: “Inflation is a choice.” In contrast, Powell and others seem to always look for external excuses for inflation, like “tariffs” or “the Ukraine war.” They are reluctant to admit that inflation is a policy choice, and in fact, inflation is one of the core missions of the Fed.

Regarding inflation, it’s also important to clarify that inflation and nominal price changes are not the same. Many confuse the two, thinking that a 5% increase in a product’s price equals inflation, but that’s just a price change, which can be caused by many factors like war or tariffs. True inflation is a dynamic concept—it’s the long-term trend of price change rates, not one-off price fluctuations. The Fed’s job isn’t to monitor monthly price changes but to manage these trends over the long term. This is often overlooked.

Kevin Warsh’s statement that “inflation is a choice” resonates with me because the Fed actually has all the tools to control inflation if they are willing to act.

Anthony Pompliano:

Interestingly, these two seemingly contradictory scenarios can coexist. I think people always want simple answers—like inflation or deflation? High or low inflation? But in reality, the economic system is very complex, and Bitcoin seems to simplify these complex relationships. You don’t need to learn all these intricate economic principles—just understand supply and demand: if more people want something, its price goes up; if demand drops, its price falls. The idea behind Bitcoin is to reimagine the monetary system. If that’s true, are they trying to make the system simpler? Do they want to reduce this complex economic machine into a system that anyone can easily understand?

Jeff Park:

Yes, the system is inherently very complex, and I’m not sure it can truly become simple. But, I think they should make it more transparent and honest. Americans have lost confidence in the current monetary system, not just because it’s complex, but because it lacks transparency. I believe one of Kevin Warsh’s tasks is to change how the Fed uses its balance sheet and address the glaring transparency issues in the current system.

For example, at the January Fed meeting, someone asked Powell about the relationship between the dollar’s value and interest rate setting mechanisms. Given the dollar’s significant strength, this was an important question because interest rates are fundamentally about the value of the benchmark currency, which directly affects long-term yields and rates. Powell’s response was: “We don’t focus on the dollar’s level when setting policy.” To some extent, he might have wanted to simplify the issue, as it’s not his expertise. But this statement overlooks an important reality: the dollar’s value is indeed closely related to interest rate policy. Yet, the two can be managed together.

That’s why I’m optimistic about the potential of a new Fed-Treasury agreement. Bessant and Warsh have the opportunity to redefine this agreement. The core issue again comes back to the Triffin Dilemma: the dollar as a global reserve currency must meet international reserve needs while maintaining domestic economic stability—these are inherently conflicting goals.

So, what we need is not absolute independence of the Fed, but a functional interdependence between the Fed and the Treasury. I think we should move away from the idea that “the Fed’s independence is under threat,” and instead accept that the Fed must establish a functional collaboration with the Treasury to craft better policies. Once we achieve this, the Fed will take a significant step forward and regain public trust.

Anthony Pompliano:

What do you think about Warsh and Bessant’s backgrounds? Both come from the same system, studied under the same mentor, and can be seen as some of the greatest risk-takers ever.

Jeff Park:

That excites me greatly. I’ve expressed my views publicly many times, and since last year, I’ve believed Warsh must become Fed Chair. It’s a historic moment because you have two trusted individuals who deeply understand each other, both having worked under perhaps the greatest market practitioners ever, and now they have the chance to bring real change. The importance of trust in this context cannot be overstated.

It reminds me of past situations—like Warsh being a candidate, then Hasset emerging as a candidate, then Reer. But throughout, I kept thinking: “You’re missing the bigger picture.”

It may seem like a Trump decision, but ultimately, who influences that decision? It’s Bessant. Who will he choose to work with? Who does he trust? Who can realize his vision and change for the country? The answer is always Warsh. When you realize this, it’s a very clear and powerful moment. Because with this trust, we can now achieve things on the global stage that were previously impossible. I’m very excited about this.

Of course, I know many people have biases against billionaires, thinking they only care about their own interests and won’t consider ordinary people. But I hold the opposite view. I believe we should expect those with vast resources to do meaningful things. Because if these resource-rich individuals don’t push for change, it might be some malicious actors taking control. Instead of that, it’s better for those who no longer need to make money for themselves to push for systemic improvements. I believe that for Bessant and Warsh, their main concern isn’t how to make more money for themselves, but how to fix the entire system.

That’s why I am very optimistic about them. They have deep market understanding because they are practitioners in the capital markets. They know that, although the Fed as an institution has its strengths, many problems remain. They possess wisdom, integrity, and clear communication skills that can drive change. This combination is very ideal.

In my view, the Fed Chair should not be a socialist or nationalist; we need a technically skilled official who is also pragmatic. Warsh and Bessant happen to have these qualities, and I look forward to their future.

Anthony Pompliano:

What’s interesting is the collaboration between Warsh and Bessant. They not only understand the US financial system deeply but also have a global perspective. For example, Bessant’s initiatives in Argentina proved to be very wise in hindsight. Although controversial at the time and some questioned the spending, looking back, those decisions were visionary.

The US has always been a country full of adventurous spirit, always with a “let’s build” mentality. But from a monetary policy perspective, the US is also trying to cut unnecessary spending and implement reforms. In this mindset, you need people who truly understand probability and risk. I think that’s also your point: these people have spent their lives studying these issues, right?

When Bessant was nominated, I’m not sure how many people thought he would be outstanding. People might think he’s smart but not necessarily overwhelmingly excellent. But if we look at him objectively now, he might be one of the best finance ministers I’ve seen in my lifetime. Warsh complements his shortcomings, creating a “1+1>3” effect. Warsh served as a Fed governor during the global financial crisis, deeply familiar with the Fed’s internal workings. Later, he used that experience as a trader. Now, returning to the system, he brings a different perspective and experience, and their trust relationship bridges their differences.

Jeff Park:

Yes, I think a key point you mentioned is that leaders need to have systemic thinking skills. Because in economic policy, actions in one area can influence outcomes in another. To understand these interactions, you must realize that monetary policy isn’t isolated. It’s closely related to fiscal policy and industrial policy. For example, Trump aimed to bring manufacturing back to the US and increase investment in semiconductors. These three are like an orchestra, requiring coordination to achieve the final goal, which demands multidimensional thinking.

Unfortunately, most academics and those who have never worked in profit-driven sectors lack this systemic thinking. Non-profit operations aren’t aimed at assessing the resilience of multiple variables or building complex systems. In fact, I believe centralized, top-down government models often just mechanically execute orders and allocate resources but lack accountability. They spend money blindly without truly reflecting on whether those investments produce real results. Developing this kind of reflective and critical thinking usually comes from experience in profit sectors. Frankly, it also requires a high level of self-awareness.

Repeating old methods won’t solve future challenges; we need to forge a new path. To do that, leaders must have credibility, which comes from their authority as systemic thinkers. This can’t be cultivated within a closed, rigid-thinking institution. The combination of Warsh and Bessant gives me confidence in the future. They are not only technically expert leaders but also pragmatic and experienced in markets. They understand how markets operate, know the strengths and weaknesses of the Fed as an institution, and have the ability to push change through clear communication and integrity. This combination is very ideal. In my opinion, the Fed Chair should not be someone with extreme ideological views. You need someone who is both technically knowledgeable and pragmatic, and Warsh and Bessant meet these criteria. I am very optimistic about their future.

Why are precious metals prices soaring?

Anthony Pompliano:

Recently, the precious metals market has been very active—gold, silver, even copper and platinum—showing significant volatility, sometimes soaring, then pulling back slightly before rising again. What’s behind all this?

Jeff Park:

This actually reflects a kind of market frenzy, and I think it’s one of the reasons we need to rethink Bitcoin investment logic. Although this wave of enthusiasm hasn’t directly impacted Bitcoin, it’s very evident in the metals market. As for the cause, I believe global liquidity conditions are very loose right now. Honestly, if interest rate cuts and further liquidity injections happen in the future, I think the price swings in precious metals could become even more intense. Some funds might flow into Bitcoin, or they might not, but the key point is that this market phenomenon is already happening.

Particularly silver, I think it’s mainly targeted by retail investors, which reminds me of the altcoin market. In fact, silver’s role in the metals market is very similar to how altcoins perform in the cryptocurrency market. Although I don’t mean to offend the Ethereum community, this analogy has some validity.

Analyzing price fluctuations of most commodities boils down to two basic factors: demand and supply. On the supply side, silver is actually a byproduct of mining other metals. Many people don’t realize that there are hardly any mines dedicated solely to silver; most silver is produced as a byproduct of zinc or copper mining. It’s like a “freebie” in the process. In the crypto world, this is similar to mining Ethereum but receiving some random tokens as extra rewards—these tokens are like silver, an additional yield.

Therefore, miners don’t specifically mine silver based on its price; it’s just an ancillary product of other metal mining. From this perspective, the supply of silver is actually quite large. Unlike Bitcoin’s scarcity, silver’s supply is relatively abundant. Ultimately, the market will find a reasonable price for silver, but because it’s a byproduct, its price can be suppressed due to ample supply.

On the demand side, although some mention silver’s industrial applications in AI and solar panels, in reality, silver is a commodity that can be substituted. Its high conductivity makes it attractive, but copper’s conductivity is only about 5% lower. This means that despite silver’s superior performance, its high price isn’t justified as the only choice. In fact, as silver prices rise, many solar panels are already replacing silver with copper.

Moreover, silver isn’t a reserve asset; no central bank buys silver. From a supply perspective, silver production isn’t fully driven by its market price but is a byproduct of other metal mining. So, overall, I think the outlook for silver isn’t very optimistic.

This reminds me of the altcoin market. Silver’s price volatility is high and closely correlated with gold, similar to how altcoins often depend on Bitcoin’s price movements. But in the end, most altcoins tend to revert to a supply-demand equilibrium. Investors who participated in crypto over the past few years can learn from this: silver’s performance in the metals market is very similar to how altcoins perform in crypto.

Anthony Pompliano:

So, you’re saying silver’s price might experience a significant correction?

Jeff Park:

Yes, if you’ve already gained good returns from silver investments, now might be the time to shift your funds into Bitcoin.