Tavi Costa Says Bitcoin Is 'Very Undervalued' and the Violent Move Starts When the Fed Blinks

Why Is Bitcoin Lagging While Miners Rip?

That's the question I keep getting this week. Gold miners are running. Silver is finally moving. And bitcoin, the asset that's supposed to be the hardest of hard money, is stuck in neutral while a chunk of its own holders quietly walk out the door.

Tavi Costa, founder and CEO of Azuria Capital, thinks that's exactly backwards. His read is that bitcoin is "very undervalued" right now, and that both bitcoin and silver are lined up for what he calls "violent moves" once the Fed's hiking cycle finally ends.

The disconnect between price and positioning here's the whole story.

The Numbers Tell the Story

Start with the sentiment damage, because that's the part people skip. Costa's argument isn't that bitcoin looks cheap on a chart. It's that the marginal believer already left. When people who bought the thesis in 2021 start calling it dead in public, that's not a fundamental problem. That's a positioning problem. And positioning problems resolve fast, usually in the direction nobody's set up for.

Meanwhile the hard-asset complex has been repricing without much fanfare. Gold miners have been one of the strongest groups in the market this year. Gold itself already ate a roughly 30% drawdown inside what Costa argues is still a secular bull market. That detail matters more than the headline number. A 30% hit that doesn't kill the trend is the market telling you the bid is structural, not momentum.

Then there's his own exposure. Costa says silver miners now make up around 65% of his book. That's not a hedge. That's conviction with a capital C.

Why silver over bitcoin? Tight floats. He points out that you can't just conjure a high-grade silver mine into existence. Permitting takes years. Grades decline. Supply doesn't respond to price on any timeline that matters to a fund manager. So when demand steps up against a float that thin, the move isn't linear. It gaps.

Two Forces, Ten Years

Here's what matters: Costa's macro thesis comes down to two forces he thinks define the next decade. A weaker dollar, and suppressed yields.

That combination is strange, and it's exactly why most investors are positioned wrong. Normally a weaker dollar shows up alongside rising inflation expectations and higher yields. Suppressed yields plus a falling dollar means real rates go deeply negative and stay there. Financial repression, in plain English.

And the reason yields stay pinned isn't a mystery. Government spending is running hot. Inflation hasn't broken. Somebody has to absorb all that debt, and the bond market won't do it for free unless policy makes it worth their while.

So what wins in that world? Anything with fixed supply and no counterparty. Gold has known this for 5,000 years. Bitcoin's only been at it for 16, and right now it's priced like the thesis broke. Frankly, that gap is the trade. Not because bitcoin always catches up, but because the link between bitcoin and liquidity conditions has been the most dependable thing in this asset class for a decade. If the dollar weakens and real yields stay pinned near zero, the cheapest exposure on the board is the one everybody just gave up on.

What Insiders Are Saying

According to Costa, the AI buildout is another leg nobody's pricing properly. His framing is blunt: there's no AI revolution without metal. Data centers, grid upgrades, transformers, cabling. That's copper, silver, and a long list of things you've to dig out of the ground. Compute doesn't scale without conductors, and conductors don't grow on trees.

He's also dismissive of the lab-made gold story that keeps circulating. Synthesizing metal at scale costs more than mining it, and even if the economics flipped, an atom made in a reactor isn't a monetary asset with a multi-millennia track record. That fear shows up every cycle. It's never been the thing that broke the trade.

On Brazil, where he's from, Costa is watching the commodity story after Lula's re-election rather than the politics. Read that as a supply call, not a governance one. Weak currencies and heavy state involvement in Brazilian mining tend to slow new production, and slower supply is bullish for anyone already holding the metal.

The reality is traders are split right now. The bears point at ETF flows and say the marginal buyer is gone. The bulls point at the same flows and say the sellers are exhausted. Both are describing one chart from different seats.

What to Watch

Three things. All of them run through the Fed.

First, the actual end of the hiking cycle. Not the pause. The turn. Costa's entire call depends on policy easing while inflation is still above target. If the Fed cuts into sticky CPI, that's the negative real rate scenario, and bitcoin and silver both reprice hard. Watch the dot plot and the CPI prints leading into it.

Second, the dollar index. A clean break below the recent range would confirm the weaker-dollar leg of the thesis. Until that happens, this is all theory.

Third, silver's float and miner earnings. If miners keep running and the physical market stays tight, silver tends to drag bitcoin's narrative along with it. Hard assets trade as a bloc once a cycle turns. They don't move in isolation. They move in sequence, and silver usually goes first.

My take: the crowd abandoning bitcoin right now is making a classic mistake. They're reading price as a verdict on the thesis. But the thesis was never about the next six months. It's about what happens to fixed-supply assets when the largest economy on earth finances itself at negative real rates.

That trade hasn't started yet. It's just been early.