Canary in the Coal Mine | Consensus 2025 Live Panel

At Consensus 2025 in Toronto, hosted by CoinDesk, Canary Capital CEO Steven McClurg sat down for a candid conversation exploring the current macroeconomic landscape, shifting consumer behavior, and the growing divergence between equity markets and digital assets. The session, titled “Canary in the Coal Mine: Macro, Crypto ETFs, & What Lies Ahead,” dives into the forces reshaping the global financial system and what investors should be paying attention to heading into the second half of 2025.

From yield curve inversion signals and credit stress to the evolving role of Bitcoin and other digital assets, Steven shares a bold and data-driven outlook on what’s next. The conversation also touches on tokenization, monetary velocity, and the structural realities facing retail investors in the U.S.

🎥 Watch the full interview below, and scroll down for the complete transcript.
Special thanks to CoinDesk and the Consensus team for hosting this insightful conversation.

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Host: You're a skilled individual. You have transferable skills, yet you take the hard path. From Guggenheim to Valkyrie to a successful exit there and now to Canary Capital, a new venture.

What do you hope to get done with Canary that was unfinished business from before?

Steven: Yeah, well, Canary was sort of an accident actually. Mostly what I've done in my career and all I really want to do is run a hedge fund, which is what we're doing.

Host: That's an expensive midlife crisis hobby, isn't it?

Steven: A little bit, but I enjoy it. Somebody asked me, how much do you read a day? I was like, oh, about eight hours a day. You know, and that just comes from my career as an analyst, as a trader. What a lot of people don't know, people think that traders just sit in front of a screen and trade all day.

And if you're working an eight hour day, and you know this coming from TradFi as well, you probably spend 30 minutes trading, if you're working an eight hour day, which I never did, I always did more. Then you know, seven and a half of those hours is always reading and analyzing charts and staying on top of your Bloomberg and making sure that you're reading every single thing that comes through.

Host: That's right. Canary lets you focus more on macro, and when we were talking earlier, I think you had a pretty significantly, let's say, defined view about what lies ahead in the US economy. That isn't necessarily the modal view right now that really pointed towards us being at the end of a comfort cycle going into dark times. Could you just lay that out a little bit for people, because I think it's a bold but well supported call.

Steven: Yeah, I mean there's certain things that I look at and a lot of it is the yield curve because I was a recovering bond trader, and when I saw the yield curve switch in December, in about mid-December, we went from an inverted curve to a normal, well, it's not really a normal shape curve. I'd call it more of a flat curve.

But the way that happened told me that the economy wasn't actually that great. I did expect to start seeing inflation coming down, but inflation coming down because people couldn't afford to buy things anymore. And we're even seeing that in the data that's coming out in the first quarter of this year. Air travel is down, cruise bookings is down, restaurant bookings is down, bar bookings is down.

People are, are shifting their spending habits from, you know, I'm not even gonna say higher end things, but even food that they're buying, they're buying less expensive food in the grocery store as opposed to more expensive food.

Consumer debt, credit card debt, is the highest it's been in a long time, and really it's a tale of two different economies. The 10% of wealthiest people in the US is really the only ones that's exposed mostly to the stock market that are continuing to see their wealth grow, where the other 90% is not.

And they're continuing to struggle to pay mortgage, struggle to pay for food and struggle to pay their credit card bills. And that isn't stopping, even though inflation's come down to 2%.

Host: I wanna get back to the yield curve, but hasn't that wealth disparity been going on a while now?

I mean, a call for a recession seems much more like there has to be triggers, right? If we're thinking about wealth polarizing, we've been hearing about that for a while. So why is that starting to really take effect right now?

Steven: Well, the reason why it's really starting to take effect now is the last four years of high inflation.

So when you see consumer spending decrease, consumer sentiment decrease, which all the numbers that we're getting in the last quarter is showing that — and again, the change of the yield curve is what really showed me that this is gonna happen — but it is happening more drastically and it already was; it's been happening for the last four years, but now we're really at a tipping point.

I do expect to see a continued decline in consumer spending across the board.

Host: Back to the yield curve. It was a, it was a gut feeling that a lot of what the original trade Brinksmanship was trying to do was get the 10 year yield lower right to allow for cheaper refinancing of debt and to get some applause from the real estate community maybe, and that just failed because what, the tenure became a chess piece instead of a flight to quality.

Steven: That's right.

Host: Is that an analysis that's, I guess, in line with your observations about the yield curve and what are the effects of that? Tenure has really never been a chess piece before.

Steven: Yeah. No, tenure is a major chess piece, and just like you said, it is the index to which all mortgage rates are tied to. And unless people can begin to refinance their homes or even afford to buy new homes, we are going to see a big segment of the economy not buying houses, not upgrading.

Because, you know, if you're paying, like me, sub 3% on your mortgage…

Host: Yeah, me too.

Steven: I know, you lock that in. And now you're paying six, you're not necessarily gonna upgrade because the massive amount of monthly payments that it's gonna cost for you to upgrade, or if you're a new home buyer, north of 6% is very expensive right now in this economy when you're trying to pay for other things.

But even more importantly is even the five year. A lot of people don't look at the five year, but I look at the five year quite a bit because that's what high yield bonds are mostly tied to. And if you know anything about the high yield bond market, that is a market that usually only issues about five year debt.

They never pay off that debt. They're always amending and extending. So they're taking out new debt to pay off the old, but never paying it off. So these represent a vast majority of small companies and mid-size companies. And if they can't amend that debt, you're going to see a lot more bankruptcies like you just saw with Rite Aid.

Host: Right. Now, this may not be a Canary hedge fund trade, but what effect is that? Does Bitcoin start to realize its destiny now as an alternative if the dollar starts to become a chess piece?

Steven: Yep. Well, one of the things we saw in the last two months… one of the things that I look at when I'm looking at investing in Bitcoin or other cryptocurrencies is I look at global M2, and based on global M2, Bitcoin should be at about 125 today, 140 in the future because of projected global M2 growth.

A lot of that has to do more with the velocity of money. A lot of people have pointed out, whoa, you know, new money isn't really being printed right now. Yeah. But the velocity of money is picking up globally. So, in addition to easing from several central banks, not quite with the US yet, we're predicting higher global M2 growth, and that is the basis of that trade.

About two months ago, there was a divergence where everything went down on tariffs, but then stock stayed down and Bitcoin went up, and that really has to do with [the fact that] tariffs have a bigger effect on equities because they have to buy materials mostly from overseas or sell to consumers overseas or vice versa.

So tariffs have a big drag on equities where they don't have the same drag on crypto.

Host: Yes, but I'll challenge, I mean, not to challenge that…

Steven: Some drag.

Host: Some drag, but also let's say sensitivity to liquidity, right? And to risk aversion, and maybe this was the first time that Bitcoin wasn't sold first…

Steven: Right.

Host: As the most hobbyist or least necessary asset, the most sensitive to liquidity. Right? So you're talking about fundamental differences, why crypto is less tariff sensitive, but that's fundamental. People don't always think fundamental.

Steven: That’s right, yeah. Fundamentals only one side.

Host: Correct.

Steven: Yeah, absolutely.

Host: Before we get back to the next digital asset parts of your company strategy, what's the right macro? Let's say, pretend that you can't touch digital assets yet to prepare. Is this a dry powder situation or is it long convexity, or is it just, what do you do?

Steven: Yeah, so there's a couple of interesting trades on the bond side of things, and our fund does both bonds and crypto; we hedge the crypto positions with bonds. A lot earlier in the year, we really focused on shorter-duration assets.

Host: To take duration out of the portfolio?

Steven: That's exactly right. We don't want to have any interest rate sensitivity because we didn't know what was going to happen. You know, we had expectations, but if I can get, I don’t know, 5% on less than one duration bonds, I’m going to take that.

Host: Right.

Steven: Now one of the good moves, I think is adding duration right now, but on the very long end of the curve, 30 year, right? So I either want under one year or 30 year.

Host: The five and ten are just too hot right now, right?

Steven: Oh yeah, tt's way too hot. It's all over the place. If you want volatility, buy Bitcoin, up the 10 year.

Host: That's something. Wow. You wouldn't have heard that at any previous Consensus. Like okay, that’s interesting.

Steven: Exactly. Yeah. But today, the way we're positioned is, I mean, almost 95% in digital assets and about 5% in short duration.

Host: So in the recovery, Bitcoin led —  I said in a piece that actually our conversation inspired that Bitcoin was like a mooring for the tariff tantrum and then shapeshifted into this all time high seeker almost overnight, right on queue.

Steven: Yeah.

Host: But it took Bitcoin's recovery to get the rest of the market woken up, and I think that's the big problem if you really expect layer ones to start leading their own kind of rallies.

Steven: Yeah.

Host: Are we gonna be stuck in this situation where you really need a Bitcoin rally and then you have a rubber band and everything else attached?

Steven: Yeah. Well the thing is, that usually happens, and I do think it'll happen to a certain extent this cycle, but not as much as it has in previous cycles. And the reason why is breadth of market. Usually it takes retail coming in a heavier way for alts to start to begin to rally. But if again, 90% of the retail market can't afford groceries, they're not buying, you know, random token that's under market cap.

Host: They're not buying Trump token.

Steven: Exactly.

Host: I know you can't talk about filings, but most have observed that you're placing a couple of bets that retail investors will want to, I guess, own and potentially trade a wider variety out of convenience because they can do it out of their brokerage accounts.

Where do you see, I mean, we saw what happened in Europe with a lot of single name digital asset, ETP issuance. There's some volume, not a lot of AUM. They're clearly not storage or retirement investment vehicles, they're trading vehicles. How do you think things will unfold in the United States with much more of a brokerage kind of culture to start with?

Steven: Yeah, it's so much more of a retail trading environment here in the United States. I mean, even the Bitcoin ETPs in Europe don't have a whole lot of volume. It's kind of store of value and they charge very high rates. Where here, the fees are lower, there's a lot more trading activity.

So I believe that you can get out to probably, you know, the top 30 in market cap tokens, and you'll have people that will want to trade them as long as it's something that is traded in the US.

But you also have to keep in mind that there's a lot of other jurisdictions that trade US ETFs as well, such as UAE, just because of the tighter spreads here…

Host: Yep.

Steven: South Korea — so it's a lot more of a global market here that will induce trading and activity. So we think that we're making a good bet.

Host: I started the day at another panel saying that it felt like 1999 where online brokerage has made stock trading a lot easier, and that kind of democratized access to technology that some people thought they understood, or, you know, people went down the education curve pretty deep. To some people's peril, but ultimately to success of the tech asset subclass, does it feel a little bit like that to you here as crypto becomes democratized to trade?

Steven: It feels a lot like that. I mean, you're gonna have your stamps.com, your pets.com…

Host: Right.

Steven: If you remember those from those days.

Host: We do.

Steven: And everybody's like, oh, people are gonna buy stamps online. And, you know, so there will be some tokens that do that. But I think at the end of the day, the ones that are building real enterprise solutions, doing tokenization, I mean, you know, Bitcoin's in a category all on its own, along with Litecoin, which is money.

But everything else is gonna fall into, okay, what is its usefulness? And does it have a future?

Host: Since the last Consensus, it feels like a lot's changed since Austin of last year. We were all just still in a dream state after the Bitcoin ETFs were released even before options and things like that.

What's the most exciting thing you can imagine taking place between now and Consensus 2026 down in Miami? Besides a shorter flight for you.

Steven: Yeah, exactly. Well, Austin, I mean, we were still recovering from FTX and the bear market at that point. So I guess the difference is, in Austin, I was riding around scooters because I couldn't afford a cab. And, you know, we can afford cabs now.

Host: Right. That's you personally! And I hope you can afford even better than cabs as we go forward.

Steven: Absolutely. Exactly. Well, the market has definitely picked up a lot more, so it's made things better.

Host: Fantastic. Steven, thank you so much.

Steven: Thank you.

Host: Great talking to you. Thanks everyone.