An early mentor once told me: "Financial markets do one thing well, and that is they force people to make the choices we otherwise will not make.”
Since roughly 2015, market relationships have done exactly this.
I could go on about the story of debt, debasement, corruption, and fraud. I could argue the point that the brokenness we see at the main street level is a direct reflection of inappropriate behaviors seen at the top levels of our government and corporations, but I won’t. While all of this may be true, regardless of party affiliation, it isn’t the most important point.
What matters more is why dislocated market relationships exist, and what they are forcing us to confront.
Market Relationships Do More Than Price Assets
Market relationships transmit information. Just as fraud signals ethical decay, broken market relationships signal structural stress. They tell us that behaviors once tolerated, excess leverage, unproductive credit, and moral hazard have persisted too long.
Market relationships signal change just as much as fraud signals brokenness of both morals and ethics.
The increase in “broken” market relationships is a signal worth paying attention to. It is the mechanism through which change is imposed when voluntary discipline fails. Is that negative? Maybe it sounds that way, but it’s natural. It’s just the way systems work. It’s how they heal and course correct. So, in that regard, it’s not negative at all. It’s no different than the old maxim: don’t fight the FED. The force at work today is larger than central banks; it is systemic.
In short, what is being unwound is our collective unwillingness to not be a slave to the lender, and to not reduce our use of unproductive credit. An increase in shadow banking has led to an increase in structurally unsafe lending practices.
Global market relationships are trying to tell us that this behavior has persisted for too long. For 40+ years, leverage replaced discipline. Debt replaced savings. Financial engineering replaced productive investment. Markets are now signaling this behavior has reached its limit.
It can be painful watching gold and silver rip to force delveraging. However, the herd could choose an easier way. They could willingly choose sound money and sound behavior over illicit profit and inflated margins. One way or another, the market will force its players’ hands.
We Can Choose or The Market Will Choose
For the past few years, we’ve watched the market choose, as we willingly turn a blind eye. So, what then, is likely to change?
The first signal is geopolitical. The world is moving away from a unipolar financial order toward a multipolar one, increasingly organized around regional blocs. The United States has acknowledged this in its own National Security Strategy. China and energy-producing Middle Eastern regions have reflected it through their growing use of non-dollar settlement in commodity trade since 2016 (oil deals in RMB/Yuan).
The expansion of digital payment rails and new monetary technologies reinforces this shift. In a multipolar world, monetary systems that benefit many regions, not just a dominant few, become structurally favored.
Gold and silver outperforming during periods of stress has been a sign for millennia. It’s proof that metals still function as base money when trust in paper claims erodes.
But what about Bitcoin?
It’s still in the process of proving out its digital gold thesis.
If we account for the recent narrative shift from “HODL and never sell” to “borrow and lend on your Bitcoin”, then evidence suggests Bitcoin’s place as a second base money is very likely. Particularly within the context of how quickly TradFi is gaining comfort with custody and lending on new 21st-century digital collateral assets.
Granted, in doing so, it diminishes the intent of Satoshi’s design; to root out leverage and TradFi debotchery. History has proven to be consistent on this point: base forms of money are suppressed while man-made monies are levered. Sound assets like gold and land are often structurally suppressed by financial engineering, so that societies can be built atop.
Bitcoin is in the process of proving whether it’s another base money with currency-like features, or just another man-made currency that can be debased by complex engineering.
I personally thought it would take a little longer to get here, but 2023 to 2025 proved otherwise. With humans at the helm, would it be unrealistic to expect Bitcoin to follow a different path?
The signal worth watching is how and which sound money assets rise amidst the breakdown of geopolitical relationships and decline of paper economic claims. This is the signal we are seeing.
As the world reorganizes into regional blocs, a multipolar world, collateral that can store value, move quickly, and settle without friction becomes strategically important. As we’ve seen, gold and silver remain foundational. Unlike Bitcoin, they are slow and increasingly constrained.
Bitcoin improves upon gold, but is starting to act more as a liquidity valve with underlying store of value capabilities.
The Heartbeat of Finance
To contextualize the financial system, think of a heart under stress. When arteries clog, blood flow is restricted, and a deadly heart attack hits. Adding a heart valve bypasses blockages and restores circulation. Since the financial system’s heart attack in 2008, debt and leverage have increasingly clogged the system’s plumbing. New policy tools and emergency facilities temporarily relieve pressure but pile on additional liabilities.
Hat tip to my friend Nik Bhatia for a reference to the above chart.
Gold and most other financial instruments are too slow to solve our existing clogs, and a steady flow of dollars is worthless at this point. Bitcoin, though, works differently. It acts as a valve, allowing liquidity to bypass congestion rather than compound it. It offers unencumbered collateral that stores value and moves at digital speed. Settlement is final. Transfer is global. Permission is unnecessary.
Bitcoin provides instant relief and flow to our ailing financial system.
In a new multipolar world, assets that can store value, settle quickly, provide liquidity, and help bypass capital controls will play a balancing role.
For now, Bitcoin’s store of value function appears to remain lower than that of gold. However, Wall Street has found a new darling for all the volatility games it provides. A lightly levered asset with utility that exceeds stocks and other assets due to superior settlement and digital enforcement of sound money capabilities.
What shifting market relationships are telling us is: the paradigm has already changed.
Whether you subscribe to the 70-year cycle referenced in Isaiah 23:15, Strauss and Howe’s Fourth Turning, or Ray Dalio’s Big Debt Crisis, they all seem to triangulate to the same conclusion: a transition from a unipolar order to a multipolar world.
Under a new order, monetary tech stacks integrating Bitcoin, digital assets, and stablecoins will use these tools to drive our next wave of advancement, influence, and coordination within and across emerging regional blocs.
Markets force choices. The only remaining question is whether we make the moves deliberately or wait until the system makes them for us.
Great post KM