Bloomberg Crypto Full Show (01/31/2023)
We are live from Bloomberg World Headquarters in midtown Manhattan. I'm Matt Miller and I'm keeping lines. Welcome to Bloomberg Crypto. Look at the people, transactions and technology shaping the world of decentralized finance. Coming up, Bitcoin is on track for an historic January. Hopes of an end to monetary tightening are helping to spur a big bounce in the token. But can it last? We'll follow the flows and get the outlook for the rest of the year from the queen chair CEO and regulating crypto post RTX House Republican French Hill weighs the lasting impact of Sandbank and Freed's fall on politics and policy.
All right. All of that is ahead. But first, let's get a snapshot of the market on you on your Bloomberg terminal. You can pull up, see our wiki go. It will show you that basically every single digital currency we track is positive on the day in Bitcoin. Of course, the leader of that, it's up
about one point seven percent on the day. We are north of twenty three thousand dollars, while ether is trading just south of sixteen hundred, up about two point three percent for its part. But really it's the old coins that seem to be outperforming like Quinn, for example, up four and a half, almost percent. Matt and then Dogecoin, the big out performer on the day up 10 percent, can't give you any real fundamental reason for that. But this is, of course, putting an end to what has been a really remarkably strong month for all of these guys. They're all up more than 30 percent in the month of January. Yeah, well, 2023 is setting up to be a
pretty good year for crypto assets after last year, 64 percent plunge in January alone. Bitcoin is heading to a roughly 40 percent gain. But the question is, will these gains stick around? Bloomberg's Abigail Doolittle has a look at the charts for us. Abigail and Matt, there is some reason
to think these gains may stick around. So here's the monthly gain that we're looking at in January. As you mentioned, nearly 40 percent. At one point it had been more than 40 percent.
And we're looking at the best month since 2020. Right now we're looking at the best month since the fall of 2021. Importantly, the RSI. This is a monthly chart. So that monthly RSI not anywhere near overbought. It has been overbought. Best back in 20, 2013, suggesting that the buyers are not tired yet. And we combine that chart with this
chart. This, too, is a monthly chart. We're really taking a longer view here. You can see a nice uptrend. You can see that Bitcoin is basically at all times hugging that 50 month moving average. You can also see these areas of consolidation that come down and triangles that they tend to cause the buyers to completely sell and then reload and take bitcoin higher. We're looking at a similar pattern right now, Matt, suggesting that 2023 might be a great year for Bitcoin. You could even see bitcoin take a run at
its all time high. And given the fact that in the past this has been used as a risk on risk off sentiment, maybe 20, 20, 30 is going to be a little bit more risk on than many would have thought last year. Got it. Abigail, thanks so much.
Abigail Doolittle talking us through the charts. Now, digital investment digital asset investment firm Coyne shares writes in its twenty twenty three outlook. This year will be a year of coming back down to earth, with many tokens likely being shunned for larger and more viable ones. As monetary policy reverses in the second half of the year, it's likely that we'll see much greater support for digital assets. Joining us now is Yvonne Man TS, co-founder and CEO of Coyne Shares. Great to have you on the program. We've talked to Milton Demir is a number of times, so I'm really happy that you could join us as well. Why do you think that the Fed is going
to reverse policy this year and how will that help Bitcoin, considering the fact that we've had this incredible run up as the Fed raises rates? Yeah. So thank you for joining me. First of all, I think the Fed started that process back in 2021 and that this trigger holds of events we saw last year from the runoff to the elephant events we have. And the Fed pudding is giving like some contention with other markets. We see where we are going from there. We're going to see what the minutes are tomorrow. But that's certainly going to help the overall market.
Fair enough. So the big run up in rates actually happened earlier or was priced in, I guess, by bitcoin as it crashed and a lot of other crypto assets. Now, I guess the market is just pricing in what's expected to be either a pause or a pivot lately. And that's why we've seen the run from sixteen thousand to twenty three.
Yeah, you can use that as a macro element, but you can also look at what's upfront in terms of events on the end of Q3 and Q4 and how the market does recover from that itself. The gap from the FCX moment has been sealed and the markets is OK. This is beyond us. We kind of understand what does the consequences of this market. But this market events and we can look at it a bit more unbiased with. So who are the buyers right now? Is it institutions that are feeling brave enough to get back in or is this mostly retail activity that has been driving such a strong month? So I think it's Su Keenan because if you see, we saw a very strong drive and drove over from since 2015 from the region. But over the years, we saw as a.
Quality of the signature of the people joining being more and more institutional. And we can see more and more institution like coming back to it and doing their homework. I'm getting very, very opinionated. I would say internally about isn't the
time for investment. And if you are invested, you've had to ride quite a rollercoaster over the last year, of course. A large part of that, the collapse of RTX and frankly, bankruptcies that came before that. A lot of assets now out there floating. Are you looking to acquire anything? Are you interested in M M An activity at this point? Shares? Well, I think, you know, we just closed in on Q3 earnings call that you couldn't share because the company was looking at a number of said bankruptcy estate. If we remember where we come from, actually country have started by the Sprint acquisition in the bankruptcy estate of a mining company in Sweden.
So it's a bit of a reputation for us or for Junior. We know very well we know how to look at these distressed assets. We know how to take a position if we need to.
We just close and we're looking at sell shoes. We disclosed we we're looking at ISE of wager. We took about Newberry, not earnings call. That's kind of stuff which I'll be honest. Nothing further would suddenly emerge from that.
But we are looking at stuff which are also probably not yet on the market and we have a strong interest in the US as well. You know, I learned my lesson about exposing my private key to the public 10 years ago now. A lot of other people are learning a lesson don't keep your assets on the exchange or have learned it in 2022.
Why should they trust COIN shares in your exchange traded product? Yeah. Well, first of all, the Erik Schatzker product is the ultimate tool. If you are not a professional and you don't really know how to secure these keys, you know, I'm quite sure we've been working in the data asset industry since 2013 and we have built an expertise around key management and also the cyber security forces around that. Know as early as 2017, we realize the need for custody of the industry and within business, within the mirror and ledger. As a French security company to create the custody project which was supporting the father Quincy, I wanted to be best in class, wanted to be, you know, almost grown up kind of action in an industry which was very much in its infancy. And we have been doing that since then. So I think if anything, the single queen
shows in business since 2014 is a digital assets industry and being a digital company. This closing statement is good and financial. Being a listed company, all that constitutes, I would say, trust and transparency, which are not discrete points. No, like we talk about reserve earlier
on this year with the exchanges. This is not painful for us that we're doing. We are every single day showing a function to the market and coming out every quarter. There is no chance essentially that you take a whole bunch of customers, funds and exchange traded products and then use them to try and generate yield in other investments. No, it's just set up. So that's not possible for you to do that. Do you think that business model is dead? What does VIX and business model? That's a different business model.
One show is not an exchange. Consider customer funds are constantly ring fence when it comes to our consumer digital securities and physical physical products that we are making. That's in a very negative way. It's part of the legal framework. We have to run this product.
So it's not something we can be content. Well, we are content with the way we are doing it and we never go the ways exchange our money stuff. So I think the actions would change our ways of running to be able to transform and strike. You mentioned legal framework. Let's talk about regulatory frameworks as well, because obviously Quinn shares is one of the largest players in the space in Europe, which arguably is far ahead of us in many ways. How do you see that taking shape as you're going to maintain its lead, as U.S. regulators and lawmakers seem that they're still dragging their feet, trying to lay the rules of the road here in the states? I think it's you need the political will first.
Everywhere you see in Europe, where you have a strong footprint in regulation, you have the political will. So if you look at France. France was very driving the European legislation. But before France stopped to drive a manual macro push for a low in 2017, which ended being translated into regulation through the euro, which followed. And you can see does wearing on chrome, you can see it is a country where the regulatory the regulatory framework has been built because of political will. Was there first in the US because we saw
last year as a presidential office making some decision and pushing the narrative in that direction. But if there is legislation, stop moving towards that, then I think the agencies would be able to figure out who is in charge. And we've look at it. Well, it just so happens we're going to speak with a legislator here in a couple of minutes, Representative French Hill, who is heading up the subcommittee on Digital Assets in the House. If you had one question for him and his
fellow lawmakers about the policy landscape here in the U.S., what would it be? We will ask him your question. Yes, it will not be an open question. So we would love to know.
Who we can regulate crypto. Between the CFTC and the S.E.C., enough clarity. That what then? Products like the ETF, which need to come to the US, can find a house because until there is clarity between this agency, it's very difficult to find the right framework. But surely they'll both regulate it.
Surely they're going to try and divide it up in some ways. Do you expect an ETF to come in the US in the next in the foreseeable future? I would love to see you come into the US. I think it would be good for the. It would be good for the industry in
itself. Sure. We'd love to be able to offer that as well. In the US, if we if we have a chance to have a product at one point in the US. But more importantly, I think even the CFTC takes a lead like you still for instance in the US. But the US oil markets back in 2006 when
it was the first US oil ETF, then SCC is administrating the product and regulating the products. So you can see things happening where yes, they work in concert, but there is no clearly which means to have on the product underlying of the product. And finally, we have seen at very various different players, including at grayscale, which of course has GTC, which is what tried to turn into an ETF in the first place. In so many different areas of the industry, we are starting to see a pulling back of the work force layoffs seemingly announced every week. What are you doing with your workforce at COIN shares? We've been very fortunate, of course, share to not hire the kind of crazy way, so we've hired a very focused way. So we have been integrating our team through different wave of hiring and we have a really underpin the overstuffed position. So we are lucky enough to not be in a
position to have to let a lot of people go. And the only reason we may have different voice for performance, not for financial reasons. All right, John Murray, thanks so much for stopping by. Really appreciate you joining us here on
the crypto show Jamboree Moneghetti of Coin Shares. Coming up, we are gonna be live on Capitol Hill, as Kelly was just saying, with the chair of the House Subcommittee on Digital Assets, Financial Technology and Inclusion. Representative French Hill Republican from Arkansas will join us next. And the author of Black Swan says crypto is indicative of the naivete in markets. After years of low ratings, the whole thing about all these claims at this point seemed to be made to feed people even more naive than those who have been working in finance with zero interest rates, namely teenagers who know a lot about computing and are designed to not understand finance. So that lets the bitcoin crowd.
I believe that Congress will have no doubt several interesting proposed bills to consider in the coming sessions, and I'm hopeful that we will see is clear direction from Congress regarding how they would like for us to proceed. We stand ready to take the direction of Congress as they would for would encourage us. We are prepared to collaborate with our sister regulator, the FCC, as we have done in the past. That was CFTC Commissioner Kristen Johnson speaking on crypto regulation last week. Joining us now for more of that conversation from Capitol Hill is Representative French Hill, a Republican from Arkansas. He is the chair now of the House Subcommittee on Digital Assets, Financial Technology and Inclusion.
Congressman, thank you so much for joining us from Washington. We were just hearing from a CFTC commissioner herself about the desire to get some kind of rule of the road here as to what the S.E.C. and CFTC should have the authority to regulate the coin share CEO. We were just speaking with also wants to see that defined. When do we expect that Congress will move on that? It's such an important question that I think the consistency in the regulatory framework and the transparency so that investors and innovators and consumers all know the rules of the road will really help financial technology and block chain develop here in the United States.
So I think our priorities look like this. I think we we want to pick up where we left off in the last Congress. Consider the definition of digital assets and the idea of a stable coin regime is a payment token. And then you're right. I think we need to look with our colleagues, both in the Senate and in the House Agriculture Committees and make sure that we can develop a bright line test on what should be traded in an ag or commodity type environment versus something that's a security and under the regulation of the S.E.C.. So these are big questions and the Digital Assets Subcommittee is going to work to find the right answers in that framework.
Well, Congressman, you mentioned there that this needs to be addressed in both the House and the Senate, which clearly are under a different leadership. How optimistic are you about the prospects for bipartisanship on some of these financial regulation issues? You know, that, too, is an important question. Last year, we saw good bipartisan cooperation thinking through that definition of a digital assets, the regulatory framework for it, how to define a payment token and determine its transparency and collateral characteristics. That was done on a bipartisan basis. We had good cooperation and help from the Treasury Department, and I believe the collapse of RTX last fall has galvanized that interest in the Senate as well, which makes me optimistic that we can work together on a bipartisan basis and a by camera basis and find the right policy solutions to help financial technology advance here in the US.
Representative, I'd love to know, just General, your takeaways from the FTSE X fiasco, especially considering that Sandbank, when freed, was so widely consulted on Capital Hill and that he funded so many campaigns. Yeah, well, I think if RTX showed us that investors of all levels of sophistication don't have the right information to make decisions around this industry. Rather, you were talking about a lending transaction or a direct investment transaction. Those both were systematically failures when it came to Alameda and FTSE X. They're now a million creditors associated with the FTSE ex bankruptcy filing. And on your point about the political
contributions, I noted that the Southern District of New York also had in their prosecution charge list of charges, the willingness to look at the Federal Election Commission law violations as well. So I think all this will come out in the investigation and we still would like to have in addition to John Wray. We would love to have Sam Brinkman freed testify before the committee and tell us how the FTSE saga unwound and what we can learn from that so that we can learn how to put the right regulatory framework in place. Does it delay, Representative, any possibility of, for example, legislation, even specific legislative legislation, say, unstable coins getting passed this year? I don't think it delays it. I think what we saw in the FTSE situation in the bankruptcy, it's going to be very informative to members of Congress and senators that are working on this. But it's not going to delay our collaborating together to propose a regulatory framework that we believe has a solid foundation so that American can be an innovator in the financial technology space and the use of blackjack. There is a line, though, between
allowing innovation to continue to foster and implementing consumer protection. And arguably the U.S. is far behind other countries in that regard. As you look at what regulators are doing thus far, the actions we have seen from the FCC chairman, Gary Gensler. Are you satisfied with what you are seeing? Because we often hear it described on this show as regulation by enforcement, right? No, I don't think double speak for every member of Congress. But I think generally House Republicans on the Financial Services Committee are not remotely satisfied with the actions of the S.E.C. over the past year. Chair Gensler told us he was the cop on
the beat. Last year, he told us he didn't need additional authorities to oversee the emerging financial technology and token business. And in fact, obviously, he did. Because RTX fully collapsed on his watch. And so we want to get answers to what were the CFTC and the S.E.C.
doing during the course of 2022. In the payment tokens and stable coins that collapse during that year and then the ultimate collapse of RTX. So what contact they have with those companies? What were their operating philosophies about overseeing that business as it related to American investors? You mean you don't have to wait for information from Gary Gensler, from the investigation? Obviously, you know, in Congress, you have a lot of influence and you have a link, I believe, on the committee site for, for example, whistleblower tips. Are you hearing of anything else? Are you getting any whistleblower tips? Well, we've been we've just begun organizing for this Congress. And I can't answer the question about blower tips, but I can assure you that my colleagues and I are discussing what the right what's the right approach to the regular regulators as it relates to what happened in the last year and how do we want to proceed and you'll see us do that over the coming weeks.
All right. Well, we look forward to seeing your progress and hope you'll come back on this program to discuss it. Thank you so much. Republican representative from Arkansas, French Hill. We really appreciate your time.
And be sure to check out our Bloomberg crypto podcast, which dives deeper than the daily market buzz to explore the stories like regulation as well as 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 Matt Miller with Kailey Leinz in New York. Now let's get to some other crypto stories that caught our attention this week. Hong Kong is sticking with a plan to become Asia's digital asset capital. The city says it's using the lessons learned from the crypto rout in the collapse of FTSE DAX to create a fresh regulatory framework that can protect investors and encourage growth. It's part of a wider effort to restore Hong Kong's credentials as a financial center after damage from Covid curbs and political unrest.
And the identities of the two people who helped secure Sam Bateman breeds bail can be made public. That's the latest ruling from a federal judge. He order is on hold now until February 7th to allow for an appeal. Thanks, Ben. He was released from federal custody in December after putting up a two hundred and fifty million dollar bail package, which included two unidentified people signing off. Yes. And it ended up adding up to far less than 250 million dollars. The first ever ETF centered on NF TS is shutting down the Defiance Digital Revolution ETF, which launched at the end of twenty twenty one.
We'll start liquidating its portfolio on or about February 16th, according to Defiance. CEO Silvia Jablonski, the fund failed to attract assets. Meanwhile, an update to Bitcoin's network is now allowing native NF on the block chain for the first time. I think this is especially interesting. I've always found NF T's pretty silly to be honest, but I respect the technology on which they're built and I've been jealous as kind of an O.G. Bitcoin enthusiast of the fact that it's
running on a theorem is blocking now it can run on the bitcoin block chain. So I think it's pretty exciting. Yeah, it's thanks to a recently watched protocol known as Orange Nose, but it's kind of causing some divides. There are some that say, OK, this adds another use case for bitcoin, but then others are saying this story is so far from what it was originally intended to be. Well, I think I feel like that's already happened. That ship has sailed for now. So a special programming note for next week.
We'll be live on Wednesday at 1 p.m.. So change your DVR. You'll have one. This is Bloomberg.