Is the Debt Crisis Pushing People to Bitcoin?

Summary

Podcast Summary: Markets Outlook — "Is the Debt Crisis Pushing People to Bitcoin?"

Host: Jen Senasi (CoinDesk)
Guest: Mark Ostwand, Chief Economist & Global Strategist, ADM Investor Services International
Date: September 9, 2025

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Episode Overview

This episode examines how the ongoing global debt crisis, central bank policies, and geopolitical risks are shaping investor behavior—especially driving interest in crypto and Bitcoin. Host Jen Senasi speaks with economist Mark Ostwand about historic parallels, safe-haven assets, government debt, and why trade finance in the commodities sector is eyeing crypto.

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Key Discussion Points & Insights

1. Central Banks vs. Political Inaction (00:00–02:23)

• Scapegoating of Central Banks:
  Ostwand opens by noting that "central banks are made scapegoats, while politicians largely don't want to address the elephant in the room" (00:00).
• Asset Price Inflation:
  He blames central bank Quantitative Easing (QE) for asset price inflation and deteriorating affordability of basics like housing, especially for younger generations.
• Complex U.S. Tariff Policy:
  Ostwand calls current U.S. tariff regimes "inordinately complex...difficult to administer and costly" (01:41), predicting more legal disputes and inefficiency.
• Political Avoidance & Public Reaction:
  The lack of political will to address systemic debt issues is seen as a key driver for individuals seeking alternatives such as crypto assets.

2. Are We Reliving the 1920s & 1930s? (02:23–04:18)

• Historical Parallels:
  Ostwand compares today's situation to "the late 20s and early 30s...governments increasingly all look a little like Weimar type governments in Germany” (02:36). He draws analogies to the Smoot-Hawley Tariff and Germany's mountain of interwar debt, underscoring the gravity and uniqueness of the current crisis.
• Crypto as Diversification:
  "It's no real surprise to me that more and more people are looking to the crypto universe to diversify their assets." (03:48)

3. Gold, Safe Havens, and Crypto's Role (04:18–06:23)

• Safe Haven Shifts:
  Ostwand notes gold’s record prices and rising role in central bank reserves, but suggests central banks still see crypto (except some stablecoins) as too volatile.
• Portfolio Diversification:
  "This is not something which you have a massive allocation to...the cryptoverse basically...offer[s] somewhere where you can diversify your portfolio because that's essentially what people are now looking at." (05:25)
• Declining Faith in Traditional Safe Havens:
  Even the US dollar is no longer perceived as truly safe—hence rising interest in crypto.

4. Can Governments Use Bitcoin to Address Debt? (06:23–07:40)

• Government Adoption Scenarios:
  Ostwand is skeptical about major economies (like the U.S.) holding Bitcoin as a treasury reserve asset, though sees it as possible among emerging market countries.
  • Example: Czech National Bank considered it but rejected it as "still too volatile" (06:58).
• US Proposals:
  He links current U.S. Bitcoin treasury ideas to FDR-era gold policies, remarking:

  "I'm not sure that it translates as well as they think it would." (07:28)

5. Are We Heading Toward a Recession? (07:40–10:07)

• Massive Economic Transition:
  Ostwand highlights ongoing global transitions: AI, energy, global power shifts—"the world is no longer Western Europe and North America-centric." (08:01)
• Asia’s Role in Trade:
  China’s decline in US exports is offset by a "24% increase in exports to Southeast Asia. So intra-Asian trade is picking up and Asia is the world’s engine of growth." (08:22)
• Cautious Outlook on Recession:
  Ostwand cautions against assuming a deep recession, citing that survey pessimism post-pandemic is often overstated:

  "We haven't got the visibility that we had pre-pandemic...surveys paint a too pessimistic view." (09:06)
  He expects any recession to be mild, “minus a half percent”, not catastrophic.

6. The Fed, Interest Rates, and Market Risks (10:07–12:30)

• Fed Rate Cut Predictions:
  Ostwand expects three 25bp rate cuts this year (not a single, aggressive 50bp cut as some predict):

  “Yes, we have got a weaker labor market, but it's essentially flatlining.” (10:33)

• Political Risks:
  He warns that a 50bps cut would be seen as “the Fed's basically thrown in the towel, giving in to the Treasury and White House” (11:17), spooking markets.
• AI, Tech Stocks, and Market Correction Risk:
  Extremely high tech sector valuations—fueled by AI hype—pose a major risk if credit tightens:

  "If you add something basically saying, well people not going to have so much money to invest in their AI projects, that is a recession and a big sell off in financial markets... that's the last thing the Fed wants to do." (11:54)

7. The Overlooked Role of Crypto in Trade Finance (12:30–15:05)

• New Frontiers: Trade Finance Meets Crypto:
  Ostwand spotlights how difficulties in accessing trade finance—especially for commodities and mid-sized players—are leading some to consider leveraging crypto, particularly stablecoins, as alternative sources of capital.

  "Anything which can be done to lower that and also improve the availability of capital...there's been a huge accumulation of...money parked...in crypto assets. Above all stablecoins...how do we leverage this to provide trade finance?" (13:30-14:03)

• Commodities Sector’s Innovativeness:
  The commodity world, known for tackling challenges head-on, is likely to innovate in utilizing crypto for financing, potentially underpinning increased crypto demand.

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Notable Quotes & Memorable Moments

• Mark Ostwand [00:00]:
  “Central banks are made scapegoats, while politicians largely don't want to address the elephant in the room…no real surprise to me that more and more people are looking to the crypto universe to diversify their assets.”
• Mark Ostwand [02:36]:
  “Governments increasingly all look a little like Weimar type governments in Germany. And we know what that led to.”
• Mark Ostwand [05:25]:
  “Safe havens don't really operate as safe havens anymore. Even the dollar is not really the safe haven.”
• Mark Ostwand [08:22]:
  “Intra-Asian trade is picking up and Asia is the world’s engine of growth.”
• Mark Ostwand [11:17]:
  “A 50 basis point cut…markets would view [this] as basically saying the Fed's basically thrown in the towel, giving in to the treasury and White House...that could set off something.”
• Mark Ostwand [13:30]:
  “There’s been a huge accumulation of assets…in crypto assets. Above all stablecoins…I think would be the arena which a lot of people...saying well how do we leverage this to provide trade finance?”

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Key Timestamps

• 00:00 — Central banks as scapegoats & political avoidance fuels crypto interest
• 01:41 — US tariffs' complexity and costs
• 02:36 — Historical parallels: Weimar, Smoot-Hawley, and the debt overhang
• 04:18 — Gold’s surge, skepticism of crypto as central bank reserve
• 06:23 — Government-level Bitcoin adoption: US, Czech Republic, emerging markets
• 07:42 — Recession risks: surveys vs. reality; global transition; Asia’s trade role
• 10:18 — Fed rate cut prospects, labor market data
• 11:17 — The dangers of aggressive Fed action and market momentum
• 12:44 — How trade finance, especially for commodities, is exploring stablecoins & crypto

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Tone & Language

The discussion maintains a sober, analytical tone, with Ostwand frequently drawing on historical context, macroeconomic data, and a global outlook. He is measured, skeptical of hype (both for crypto and AI), and focused on underlying structural issues. Jen Senasi skillfully guides the conversation, keeping it accessible for a broad audience.

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Summary Takeaways

• The global debt crisis and inadequate political response are fueling a search for alternative assets, including crypto.
• Traditional safe havens—gold and the dollar—are losing their luster, shifting diversification strategies.
• While large, developed economies are unlikely to adopt bitcoin as a treasury asset soon, interest from emerging markets and new financial use-cases (like trade finance) are growing.
• Market recession risks are real but likely overstated in public discourse.
• Crypto’s next frontier may lie in serving the trade finance needs of the global commodities sector, especially via stablecoins, amid a volatile, capital-strained world.

Transcript

[A]

The worrying part is probably that central banks are made scapegoats, while politicians largely don't want to address the elephant in the room. And that is a very big challenge in this age. And it's no real surprise to me that more and more people are looking to the crypto universe to diversify their assets.

[B]

Hello, everyone. I'm Jen Senasi and you're watching markets outlook on CoinDesk. Joining us today to dissect a global economy where central bank policy and geopolitical risks are sending conflicting signals to investors is chief economist and global strategist at ADM Investor Services International, Mark Ostwand. Hey, Mark, good to see you. Good to see you, too. Let's just start with a question I like to ask everyone on this show. What are you watching lately? What's keeping you up at night?

[A]

Well, my perennial one is that we don't want to talk about asset price inflation, which has been induced by central bank QE. There's still 20 trillion of central bank QE out there. And in many senses it's the source of a lot of our political tensions around the world because whether it's housing or other things, a lot of people in the general public are being priced out of things which they used to think they were entitled to or they could work hard for and get to. And now for a lot of the younger generation, the, the idea of aspiring to own their own flat or house is a major challenge. And it is because of that qe. But otherwise, one is looking at this inordinately complex US Tariff policy. I think it's underappreciated now, so complex with so many exclusions. We had another huge list at the weekend with an annex also saying, and these things may also be excluded, that for businesses and indeed for government, it is going to be inordinately difficult to administer and costly. And if we come round to the other aspect, when governments go to check whether the right tariffs have been paid, you can guarantee that there are going to be a lot of legal cases which again, is going to be a big waste of time and money. I'm sure we can all spend our time and money on that.

[B]

Well, let's dig into that a little bit deeper. I mean, just to make sense of this for the audience. Can you draw on a time where we've been in this situation before and maybe use some of the learnings from that time to predict what might happen?

[A]

I don't think we've really been in this sort of situation since the late 20s and early 30s of the 20th century. Governments increasingly all look a little like Weimar type governments in Germany. And we know what that led to. Central banks are faced with a challenge of tariffs clearly pose a threat to growth globally. They pose both inflationary threats above all in the US but deflationary threats elsewhere. So trying to deal with that and balance that out is inordinately difficult. There isn't really, I think, particularly given the high levels of government debt wherever we are, any sort of precedent, unless one's going back to the 19th century. And that becomes very, very difficult as a comparison because capital markets just weren't free flowing there. But I think this is, you know, with the tariffs, this is a little bit like going back to Smoot Hawley in the early 30s and with the central bank debt, well, the obvious comparison is with Germany with its mountain of debt in the 20s and how that gets resolved. But the worrying part is probably that central banks are made scapegoats while politicians largely don't want to address the elephant in the room because they know it would be unpopular. And that is a very big challenge in this age. And it's no real surprise to me that more and more people are looking to the crypto universe to diversify their assets.

[B]

Well, let's talk about that. Gold recently hit an all time high. It seems like people are looking for that safe haven asset. But bitcoin really kind of trading rangebound lately. Talk to me a little bit about your outlook on crypto and how it comes into the picture here in these circumstances that you've just laid out for us.

[A]

Well, I think as with gold, we've seen the proportion of gold in central banks foreign exchange assets rise dramatically. Now central banks probably still consider the crypto universe, though perhaps not stablecoins, too unstable for them to diverse into the foreign exchange reserves. But given the institutionalization that we've seen within the crypto sphere, I think a lot of people are just going to be looking at it more and more. They won't. This is not something which you have a massive allocation to. But if you can have less allocation allocated to riskier assets and indeed to assets where valuations now look so challenging, like tech stocks, you will be looking at the cryptoverse basically as offering somewhere where you can diversify your portfolio because that's essentially what people are now looking at, that you know, that the safe havens don't really operate as safe havens anymore. Even the dollar is not really the safe haven.

[C]

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[B]

I'm curious to hear your thoughts. Given the debt that we were just talking about, you know, given what we've seen the government in El Salvador do with bitcoin. We've heard the government in the United States talk about a Bitcoin Treasury Senator Cynthia Lummis outlined a plan to leverage a Bitcoin treasury to start to address some of the debt in the United States. Do you think we're going to see more governments start to look at crypto in that way, given the situation that you outlined at the beginning of this interview?

[A]

Not in the way that the US is, I think we can you could certainly see it more. It's more likely in the emerging market countries, even larger ones in Europe. I think it highly unlikely that the Czech national bank has said it has considered it, but in the meantime has said no, it's still too volatile for it. I think the problem is what people really need to have a look is how much of this US idea of the current administration is borrowed directly from the FDR era, Franklin D. Roosevelt and what they did with the US's. All the gold that was there, it seems to be heavily borrowed from that. And I'm not sure that it translates as well as they think it would.

[B]

Are we heading towards a recession?

[A]

I think we need to be a little bit careful. There's two things I say frequently when I'm speaking at conferences. One is we are basically in a massive economic transition. Whether it's to do with AI, whether it's to do with the energy transition, whether it's about the balances of power in the global economy. You know, we had the SEO meeting the Shanghai Corporation Organization last week with a massive show of strength from China, Russia and India, highlighting that the world is no longer Western Europe and North America centric. And we're seeing that above all now in terms of global trade. What's saving China at the moment from this massive drop that we saw today in exports to the US of 33% year on year is a 24% increase in exports to Southeast Asia. So Intra Asian trade is picking up and Asia is the world's engine of growth in recession terms. What I'd say is we haven't got the visibility that we had pre pandemic. So what we get in surveys is generally always more pessimistic than the outturn. It used to be the case pre pandemic that surveys tended to actually be over optimistic in terms of global economic prospects and the actual outcome was generally a little bit weaker. Now, the rule of thumb, and this is why one has to be careful when one talks about recession risk, is that surveys paint a too pessimistic view of global economy. You can see that above all in the Eurozone, in the uk, in the us, I do think that tariffs, along with immigration, the immigration policies and the fact that the big beautiful bill really did nothing to deal with the US's huge debt levels, they're all things which put all the risk towards recession. But if people expect 1, 2% contraction, that's probably over egging it. We're talking about a recession which would be minus a half percent. So something which isn't encouraging for risk appetite, but not something which is basically oh my goodness, what we're going to do because everyone's got so much debt and they really have no fiscal headroom to give support to the economy by borrowing more.

[B]

Let's talk about the US for a second. Standard Chartered expects the Fed to cut interest rates by 50 basis points this month following the soft August job reports. What do you anticipate?

[A]

I've been of the view all year that we would get probably three rate cuts this year, all of 25 basis points. I'm not changing that view for the simple reason. Yes, we have got a weaker labor market, but it's essentially flatlining. We're not talking about minus 200, minus 300 on payrolls though. We've had some pretty bad household survey numbers, but there's a lot of debate about its reliability. And the other part of it is going to be revealed on Thursday when we get the inflation data. And this is the thing which is going to check the Fed, as long as it's not peppered with appointees from the government, and that is we're expecting headline inflation at 2.93% in core at 3.1 and the monthly reading of 0.3. None of those are consistent with the Fed hitting target. Now obviously it has a dual mandate, but it can be responsive to the weakness in the labor market and try to preempt some of that with rate cuts. But what it can't do is get very aggressive. And I think partly the political interference markets would view a 50 basis point cut as much as they're discounting it now. Well, the chance of it now as basically saying the Fed's basically thrown in the towel, giving in to the treasury and White House who's in charge and they would really worry about that. And that could set off something. The Fed will be worried about doing something which is too aggressive, which sets off chain reactions in financial markets. And part of that also is looking at these very high tech tech stock valuations. Yeah, I mean it's all a big momentum trade. Yes, AI is you definitely writ large over the future, but at current valuations I think that's more than fully priced in. And if you add something basically saying, well people not going to have so much money to invest in their AI projects, that is a recession and a big sell off in financial markets, that's the last thing the Fed wants to do.

[B]

All right, Mark, the last thing I want to ask you before we wrap up here. Before we started the interview, you said that there's something a lot of folks in crypto aren't talking about and that's people on trade finance for commodities. Looking at the crypto industry as an alternative to funding. Unpack that.

[A]

For me, trade finance has become ever more challenging, not only because of all the disruptions we've had supply chain disruptions, sanctions, tariffs, banks have looked to de risk a lot of their books. What they do now is tend to provide lines of credit to the big commodity trading houses, they the traffic gurus, the Glencores, et cetera. But it's either a problem that you can't get access to that capital, particularly for the medium sized entities trading in commodities and energy, or it's an interest rate because we would think oh well, yes, but dollar interest rates are only about four and three quarters five. Well, you have commodity trade finance, particularly in places like Africa, parts of Asia. You're talking about dollar rate of 15 to 18%. So anything which can be done to lower that and also improve the availability of capital. So there's been a realization is there's been a huge accumulation of assets of money parked to a certain extent passively in crypto assets. Above all stablecoins I think would be the arena which a lot of people and people saying well how do we leverage this to provide trade finance? And it's something which it's in its infancy, but in a world where we've got so much volatility, where there are so many risks, the commodity world has always been very inventive. In any case, any challenge they meet straight head on. There's no, oh, well, we won't do that. You know, it's like, no, this has to move from A to B, whether it's oil, Agrippa, metals or anything else. So what are we going to do about it? So that's why they're looking at it. And I don't think it's something which is probably that appealing as a topic for discussion for most crypto enthusiasts, but it is nevertheless an important one because if you start getting more and more interest from that as people look at it as a vehicle, a potential vehicle, start to innovate for trade finance purposes, then there will be a lot more demand. That obviously is something which would underpin the cryptoverse very, very distinctly.

[B]

Mark, thanks so much for joining me on today's show. It was a pleasure.

[A]

My pleasure too.