Bloomberg Crypto Full Show (04/04/2023)
We are live from Bloomberg World Headquarters in midtown Manhattan. I'm Matt Miller and from our studios in Washington, D.C., I'm Kelly Lyons. Welcome to Bloomberg Quicktake. A look at the people, transactions and technology shaping the world of decentralized finance. Coming up, Bitcoin surging to the top of the financial leaderboard last quarter. But how durable is this year's rally? Veteran trader Glenn Goodman weighs in. And Citi says trillions of dollars in assets could be token ISE by 2030. We'll talk about what that means and
what it's going to drive mass adoption of block chain with E wise. Paul Brody. And one meme token continues to benefit from you on Musk's Twitter antics. We've got the details on Doge. So all of that is ahead. But first, let's get a snapshot of the market. The best way to do that.
On your Bloomberg terminal seat are white Pete go. And what you will find is that broadly, it is an update for digital assets, including Dogecoin, which has rallied substantially over the course of the last several days after a picture of DOJ ended up on Twitter and replaced with the bird when he tried to go to the home page. That leading to a rally in that particular meme token, if you will, up about 5 percent on the day. But ask for some of these more big guys,
more established players in the digital assets space. Bitcoin continues its rally up about one point eight percent on the day. We are right around that twenty eight thousand dollars level either. On the other hand, in 1865, outperforming Bitcoin up about 5 percent in finance coin as well, higher by about three point two percent on the day.
All right. Well, bitcoins ended the first quarter, up more than 70 percent ahead of a lot of other major asset classes. I mean, if you take a look at this chart, you can see the massive gains for the O.G. crypto coin doing much better than tech stocks. We talk about the Nasdaq 100 back into a bull market since its lows on December 28. The S&P year to date up about 7 percent. And oil even with the gains that we've
seen since the surprise cut on Sunday, down 5 percent year to date. So it's pretty amazing that we've seen such an outperformance. Even after the collapse of FTSE X and the CFTC lawsuit against finance.
Galaxy Digital CEO Mike Novogratz says rising crypto prices suggest that an energized investor base is shrugging off the crackdown concerns here in the U.S.. Our industry didn't comport itself very well. So now we're under assault from the U.S. government. We're seeing overseas lots of activity in domestic government that's really trying to smush an industry. Despite all that, prices are going higher. I'm bullish as can be mostly because not because all the institutions are going to come in.
That's been slowed down, but because the people that started this revolution are re energized in a lot of ways. This is cryptos moment now with bitcoin heading higher. There are still some interesting moves under the surface. And for that, Charlie Bassett is here with a closer look. Charlie?
Yeah, thank you, Matt. Well, let's take a look on the service, because the exchange volumes of Bitcoin trading alone. Volumes have surpassed 24 billion dollars per day for a period during the end of March, according to the block. But more recently, take a look at how spot volumes have come back to below 7 billion dollars. That number is above where we were earlier this year.
But again, it's so much lower than where we were before. There are also interesting movements among decentralized exchanges, though, Matt. Matt Hogan, the CEO CIO bit wise in Bass, notes that the March volumes on unit swap were also billion dollars more billions more than we've seen up Coinbase, the largest U.S.
crypto exchange that's more centralized, allowing more movement between fiat currencies and crypto currencies, while institutions are more privy to trading on big crypto exchanges like Coinbase. Retail investors do flock to define exchanges, which are more peer to peer and facilitate trading between did different ads that CAC classes in digital assets. But if you take a look at how retail investors are trading even Bitcoin, you can see that they are dominating. Galaxy's Alex Thorn points that that over the course of the year, Bitcoin whale traders have been declining, but address is holding fewer than 10.
Bitcoin has been ticking up. Now, of course, there are still risks as bitcoin tops twenty eight thousand dollars. Institutional liquidity provider paradigm says that options markets are still showing real downside risks. But recently they have had returns near record days, volumes uncertain certain bitcoin derivatives that go out all the way to march with demand to own bitcoin at above thirty four thousand dollars. A paradigm executive says this kind of call option demand has cooled a bit, but a lot of it had come when Bitcoin prices dropped last week in the wake of a regulatory crackdown on finance in the United States. Now another big risk, however, even with prices topping twenty eight thousand dollars for bitcoin, is the idea that trading volumes are waning.
And that draws questions about demand for the asset at these prices. All right. Excellent points there, Sonali. Let's put them. All right now to Glenn Goodman, veteran
trader. He's also the author of the book The Crypto Trader. Glenn, let me get to that liquidity concern that finale just addressed isn't necessarily the case that in low liquidity, the price would rise. I could imagine that Bitcoin would just as easily get smushed to use Novogratz as terminology and low liquidity. I mean, somebody has got to be there to lift the offer, right? Yeah. I mean, look, we're in a situation of low liquidity, low volumes compared to what we've seen traditionally, but that's kind of typical when your you know, not in a roaring bull market.
And it's been a good couple of years now. So most of the institutions have more or less left the space. There's just not as much interest as there was in. Of course, the liquidity concerns are tied to this operation choke point to point zero, as it's being called, the. The way that the US government is encouraging its regulators to kind of put pressure on banks that deal with crypto and that kind of thing. So, you know, there are a lot of
different players all sort of pulling back from the space. And as you quite rightly say, that means that Bitcoin is bound to be more volatile in an upwards direction, but also possibly, you know, in a downwards direction. We're already seeing volatility rise and it could get worse. So don't be surprised if we get, you know, big moves in one direction or another.
But actually, unpolished like Mike, no regrets, not perhaps as militias in he's like totally bullish and investors are energized. No, I wouldn't go quite that far. We're still just sort of days in this rally, but nonetheless, it whizzing bullish signs. We see Bitcoin react in a very positive way. Despite all of that news that we've seen, it's looking good to me.
Well, Glenn, I have so many conversations here in Washington about Operation Choke Point to point out that's something I've been hearing for weeks now. And it also suggests that perhaps in the longer term, the U.S. is going to be a less friendly place for crypto in general. So what fills the gap?
What does that indicate about how long these liquidity challenges could persist? It's a tough one because we just don't know what the US government is going to encourage regulators to do next or indeed what the regulators will do of their own. But we know that pretty negative and a bearing down on crypto. How much damage can they actually do? Potentially quite a lot. Let's face it, this is the United States we're talking about. It is the big kahuna country for finance throughout the entire world.
And the dollar is the global reserve currency. All of this is crucially important. And yes, they really could bear down on Bitcoin. OK. They're not affecting the price at the moment, but the whole crypto space is sort of running for cover. And the crypto space sort of binds other
countries that perhaps it feels more comfortable in. Those might turn out to be the E.U. or even the U.K. where I'm based over here, we're hearing much more positive sounds out of the government or of course, parts of the Far East might turn out to be more hospitable. So it's not necessarily the end of the
road for the corrector industry. If the US turns against that. But it's certainly a major stumbling block. Let's be honest. Yeah, well, Glenn, you just said there essentially that policymakers and regulators to this point aren't affecting the price. So what is affecting the price?
What kind of correlations do you see? How is Bitcoin tied and or not to the macro picture right now? Right. Well, this is the good news, really. And it's partly why I'm still bullish on Bitcoin is because, as you rightly said, the stock markets now, you know, Matt Jihye Lee said the stock markets were now in more of a bull market than they were before. And NASDAQ in particular, of course, has been doing very well. And when you look at the correlation between NASDAQ and Bitcoin, the same correlation we've been talking about for more than a year now, it started in November 2021 when Bitcoin started going down along with tech stocks. The ups and downs kind of mirrored each other all the way down. And now on the way back up, it's the
same story. This is not a coincidence. Like investors, I've kind of put bitcoin under theory and to some degree in the same pot as tech stocks. So they're considered, you know, risky that considered risk assets now, certainly.
Well, there's also a parallel story which kind of muddies the picture a bit, but is also good for Bitcoin, which is, of course, this flight to safety after the banking crisis that we had just a few weeks ago. People are what some people are now, again, starting to see bitcoin as a possible monetary alternative to the dollar. And why do I believe that? Because look at the correlation between bitcoin and gold, bitcoin and gold, both rising gold is benefiting from that same effect to people fleeing to a different kind of money. And likewise, people fleeing to bitcoin at the same time. So you've got a kind of double reason really why Bitcoin is going up at the moment. On one hand, you've got tech stocks going up. On the other hand, you've got gold going
up and both of them are encouragements to the price. Glenn, I learned very early on that you'd never share your private key with anybody. I had some bitcoin stolen from me on live television about 10 years ago. Do you think that investors are moving a substantial amount of their holdings off of centralized exchanges and either keeping them, you know, in cold storage at home or putting them in decentralized exchanges? We certainly seem to be seeing a fair amount of that going on. Yes. Is it enough to make a massive difference to the overall picture and liquidity? It's suddenly making a difference. Yeah. But at the same time, it's a good thing
is that like you just said, you know, not your keys, not your crypto. They always say. And that's true. And if people have learned lessons from RTX, then that's a fantastic thing. And now, of course, with finance, the CFTC coming down on finance, people got scammed again, withdrawing money from finance. And of course, that's the world's biggest exchange by fall.
So as as a crypto enthusiast, I really don't want to see finance get into serious trouble or an to fail. That would be really, really annoying. Apart from anything else, we wouldn't be left with massive changes. Well, without lessons, coinbase, which is far smaller. All right, Glenn, I think you get a lot of pushback on that.
Some people would welcome that turn of events, but they have to be the seriously old school O.G. crypto traders Glenn Goodman or Holder's Right or holders. Glenn Goodman, veteran trader and author of the book The Crypto Trader. Really appreciate your time.
Coming up. Paul Brody, e ISE Global BLOCK Chain leader joins us. Yeah. Looking forward to that. Plus, the new face of Twitter. I say that with a question mark. How the logo change sent the price of Dogecoin soaring and to access all the latest data and news on crypto. Check out. See our AYP go on the terminal.
This is Bloomberg. This is Bloomberg Crypto. I'm Kailey Leinz in Washington with Matt Miller in New York. Well, as much as five trillion dollars may transition to new forms of money by 2023 2030. Rather, that's according to research conducted by Citigroup. The study found roughly half of that money could be linked to block chain technologies, including central bank digital currencies and stable points. The report reads, quote, Almost anything of value can be token ISE and tokenization.
A financial and real world assets could be the, quote, killer use case block chain needs to drive a breakthrough. Joining us now is Paul Brody. He is global block chain leader at E Y. Paul, thanks so much for being here. Does that view seem right to you? How optimistic are you on the adoption of block chain technology? I'm actually pretty optimistic and I would actually say that this is somewhat conservative view. If you look through the city bank report and you look at their own projections that we've made. That would imply actually a slower rate of adoption of crypto than a lot of other really token ISE digital assets.
Then a lot of other things like cloud computing. So I think five trillion dollars by 2030 is actually a fairly conservative calculation, but it's it's quite reasonable and I'm quite positive on it. It gives us plenty of time to work through some of the regulatory challenges and the other technology enablers required to scale it up that massively. OK. Well, you just referred to some of those challenges, I guess a question is really what stands in the way? What is the greatest barrier? There are really two barriers, I think the first is a regulatory barrier, so there are rules. They're not completely clear and people feel uncertain about them, particularly the United States. So there's going to be more action in Europe, which are your prior guest was talking about. We're going to see a slow ramp here in
the US as the rules become clearer. But the second thing is scalability and privacy technology on public blog chains. So today there really isn't any real privacy in the public box and ecosystem. But if we're going to have people keep their major investments, if we're going to have people track real world assets which are uniquely identifiable, then we're going to have to get through and deploy RTS technologies into the public bar changed with ID and not or anonymity, but for confidentiality. Paul, one of the things I've always wondered when people talk about the utility of the block chain is how that translates into an argument that I need to own the token. I mean, a lot of these block chains have
tokens that are incredibly divisible, right? So you only need to own a few in order to token ISE very many assets. Is there any reason that, for example, if you're going to token ISE something on a theorem, I think that the value of ether should rise. That's one of the toughest questions that exists for people who transact in this space, because in general, they talk about sort of the cost of ether you need to do a transaction is in terms of gas. And it's a really, really good analogy because when the price of gas goes up, what do people do? They buy more efficient vehicles when the price of gas peaks on a theory. And a couple of years ago, we saw people
really making very serious investments in layer two technologies in improving the maturity of their algorithms. Over the last five years, for example, we've improved the efficiency of our privacy technology by a factor of a thousand. Now, I think it's really hard to predict is there going to be a thousand times more demand? I think eventually, yes. One of the lessons from the world of computing seems to be that the industry gets larger even though the costs get lower because people consume much more of this transaction capability and processes. So broadly speaking, I think there is a possibility of a good relationship between demand and the value of the underlying ecosystem asset, particularly in the case of a theorem where the axe is used to pay for transaction costs. That's really, really important. How much of a stumbling block is the AC sees, you know, the concerns that the S.E.C. has about staking to a theory?
We get a medium sized one. I believe it's going to get worked out. One of the things that I'm really bullish on and people don't talk a lot about is the fact that actually there's dozens of use cases for the enterprise that aren't financial services. You don't need regulatory approval to do inventory management, physical asset management, supply chain management, procurement operations. It's great if you can add the financial
component. You can do things like borrow against the value for inventory. But for a lot of enterprises, we're going to see really rapid growth and blocked in adoption.
That's unrelated to financial engineering and is much more focus on business operations. And we believe our own forecast is that a theorem in particular is going to become the foundation system for B2B integration and collaboration. I was looking at a post you wrote for a coin desk, and this relates to the kind of cost aspect of all of this, saying that at UI it costs you about five hundred thousand dollars to add a new chain to your block chain analyzer platform. And he's done between 10 and 20 percent of that each year, keeping it up to date. I mean, how cost prohibited prohibitive is it to add multiple layer one block chains? I mean, I'm just wondering what this means more widely. So I believe that actually what's happened is we've reached the point where there are too many layer one block chains and in particular the technology industry loves standards. So I think we're consolidate heading
towards really just one for programmable token ISE assets, which is a theorem. And then Bitcoin will continue to be a high value digital asset. But I think for enterprise users, it's going to be a theorem. And really a lot of the innovation action and the bulk of the transaction business today is shifting into theory and layer 2s. So I think actually the path forward for most other layer ones is probably they're going to have to reshape their business to become a layer two on a theory. All right, super interesting stuff.
Thank you so much for joining us. Please come back soon. Paul Brody of why we appreciate your time. And for more time talking all things crypto, make sure to check out our Bloomberg crypto podcast, which dives deeper than the daily market buzz to explore the stories and the people shaping the ever evolving digital landscape. Look for that every weekday wherever you get your podcasts. This is Bloomberg. This is Bloomberg Crypto. I'm Kailey Leinz in Washington with Matt Miller in New York. Now let's get to some crypto stories
that caught our attention this week. Former senior officials at Gemini are rolling out a token backed by U.S. Treasury bills. The token, known as T Bill, will be offered on decentralized finance platform, open even and offer around 5 percent yield. Its response to a gulf and returns between traditional finance and decentralized crypto. One day, France is exploring ways to regulate decentralized finance. The country's banking supervisory body
has opened a comment period on a series of proposals and invited crypto asset companies, clients and observers to take part. The scrutiny was prompted by the collapse of FTSE X last year, and Twitter seems to have gotten a facelift of sorts. Some users have reported seeing the site's home button, usually a solid blue bird replaced with a cartoon Shiba, a new face associated with Dogecoin.
CEO Elon Musk posted a photo of an earlier exchange in which a Twitter user urged him to make the change. Dogecoin then jumped as much as 30 percent and that I don't know if I should feel special or if everyone has it. But my home button is now the face of Doge. It's so weird to me and I'm impressed by the long jeopardy of dogecoin. I've always thought about it like platform shoes or ripped jeans, something that's a fad now, but that you will definitely regret later on in life. Nonetheless, it has lasted years.
No, no. Small thanks, of course, to someone like Elon Musk. Well, I was going to say I feel like it keeps being brought back to relevancy because of billionaires that own social media platforms like Elon Musk. But it just goes to show you how there is still a whole aspect of the crypto universe, which really is just speculation assets that aren't necessarily tied to anything fundamental. Remember, this was supposed to be started as a joke. Yeah. And let's not forget also that Mark Cuban helped out as well with Dogecoin.
There are a lot of people, of course, who think all of crypto is that kind of fad that will backfire eventually. But it's pretty difficult to make that argument when you look at the stability of Bitcoin. Even after the collapse of FTSE X, even after the CFTC suit against finance, with all the problems that this industry has had, it is. I will remind our viewers again, an asset that has climbed 70 percent year to date and is still hovering at over twenty eight thousand dollars more than 10 years, 13 years since it was invented. Yeah, it's a really good point. We'll see, though, if we can crack that 30000 dollar level and on a persistent basis.
So we're gonna keep watching for that. And of course, we will be back here next Tuesday with one at 1:00 p.m. Eastern, Matt, with an update on all the prices. Absolutely. Coming up next week, Danell Dixon, CEO and executive director of Stellar Development Foundation, joins us. This is Bloomberg.
2023-04-06 06:41
