Bloomberg Crypto 06/18/2024

[Music] live from Bloomberg's world headquarters in New York I'm shanali bassic and I'm Tim stenc welcome to Bloomberg crypto a look at the people transactions and Technology shaping the world of decentralized Finance Tim Bitcoin is taking a summer slump it sits at the lowest level in more than a month outlow from digital assets are hitting the crypto Market we're going to talk about this volatility and the road ahead with crypto with melum Demir is a coin shares adviser and crypto startups are seeing a Slowdown in funding Edith race from uh Edith Young from race Capital joins us to talk about the opportunities inside and outside of the United States all that ahead over the next half hour first though we start with a snapshot of the market and look at that just read all around Bitcoin touching a on month low the prospect of higher rates for longer leading to some pain in Bitcoin and The Wider crypto Market over the last 7 Days Bitcoin down 4% all coming at a time though when we're seeing new record highs when it comes to equity markets the S&P 500 hit its 30th record this year just yesterday in fact stocks and bonds have delivered better returns than Bitcoin in the second quarter of the year it's quite a turnaround from what we saw in the first quarter when digital assets outperform traditional markets by a significant degree and it's not Bitcoin not just Bitcoin moving lower today we got ether and altcoins such as Solana tether Dogecoin all moving lower today as well ether down 2.7% Solana down 6% tether just going into the red uh moving from green to Red just now and Dogecoin uh down about 88.2% chali and let's zoom out look at the weekly performance here of Bitcoin because as you mentioned it has been seeing quite a slump it's hit a level last scen in miday last week's higher for longer messaging from the Federal Reserve does pose a challenge for speculative Investments such as crypto and you could see so much of the love you saw on crypto was earlier this year when you saw the Advent of those Bitcoin spot ETFs hit the market here and you have lost a lot of that steam with the last three out of the four weeks seeing outflows Tim well speaking of outflows and losing steam that's what we're seeing when it comes to flows for crypto products last week about $600 million was pulled from digital asset products just last week this is the most going all the way back to March this data from coin shares International again this is all about rates Traders have scaled back expectations for the FED to cut rates posing a challenge for speculative Investments such as crypto chenol and we're going to bring in coin shares advisor melum Demir here because of course we've been talking about that sour mood here in crypto lately meltam and you know earlier this year when a lot of people started buying into the market with those ETFs there was a big question on whether this was was the top whether if you bought in now you would see a lot of gains in the longer term how do you answer that these are all great questions I'm calling it sideways summer we had the winter of our despair we had some thawing and an incredible incredible two quarters with record inflows into epfs as of today 16 billion in net inflows really Blockbuster performance across the nine us Bitcoin ETFs and I think what we're seeing now is exactly what we saw in March we had a hawkish fomc last week CPI still coming in hot expectations of rate Cuts were being priced in volatility also really low trading volumes we traded 22 billion last week this week we're looking at around 11 billion in trading volume so volatility is down trading volumes are down I think there's a lot of uncertainty and again the question we always look at at coin shares is where are these flows coming from and the question rep this summer is going to be what is the story around flows who are these net new buyers where are they coming from and more importantly what is it they're buying it's really A Tale of Two Cities in crypto we can dig a bit more into that as well well what do you know about these new buyers where are they coming from who are they these are great questions and again I think what we're seeing this cycle is historically one of the great things about crypto trading data is trading happens on Shain settled on chain so we had the ability to look at the Bitcoin Ledger The ethereum Ledger and see where activity was Happ happening the ETFs have really obus a lot of that data because settlement isn't happening necessarily on chain uh you know coin Bas and some of the other larger authorized participants in these ETFs are not settling until day after maybe they're dividing volume between wallets so it's more challenging to get the data we get it after the fact we did get q1 13f filings from hedge funds and I was personally shocked that there weren't more large funds buying we did see a few larger us institutions participating but by and large it's still driven by retail and a lot of rotation from people holding assets maybe arm chain or on a coinbase rotating into a product that's traded in a brokerage account and then the second thing we're seeing is a lot of rotation out of the grayscale products into ibit Fidelity ETF and other lower seed products as well sideways summer Melton but how can you be sure that the next move forward is in significantly downward there's no guarantees in crypto if there's anything I've learned I'm always surprised by this industry what I will say I think what we've seen is Bitcoin we still up 50% for the year ethereum around 40% the year despite a slow start in ether we're seeing it buoyed by this news of a pending e ETF potentially some flows materializing from there I think the big question here is with more assets flowing into ETFs versus Bitcoin held on exchanges for me the big question is how is Bitcoin going to perform versus alts or these higher risk sort of longer tail crypto assets so far performance there historically it's Bitcoin runs first and then all start to run driv by wealth creation in Bitcoin now with money going into the ETFs held on brokerage accounts versus Bitcoin held on crypto exchanges where there's access to these applets on one screen I think that effect has been greatly minimized and we see that across the board with underperformance in everything outside of Bitcoin and ethereum now melum how do you think through the prospects for e moving forward there was a lot of questions around what an ETF would do in terms of drawing new interest into it but of course ethereum is not as widely known as Bitcoin had been for the last several years how do you think about that Dynamic moving forward I think this is a really interesting question I think for institutional allocators getting comfortable with with Bitcoin for most investors frankly you know bitcoin's been around for 15 years it's been widely discussed widely mocked now it's being accepted as an asset um you have Larry think Paul tutor Jones some of these luminaries in the world of traditional Finance going on and endorsing bitcoin's role in an Investment Portfolio but again we haven't really seen these massive institutional flows materializing yet if we look again at 13f filings if we look at Bitcoin exposure on the institutional side and these disclosures being filed at the end of q1 still a lot of retail activity I think with ether the story is even more challenging um awareness of ethereum awareness of the supply and demand dynamics of ethereum awareness of the growth potential of ethereum is still limited that being said I do think crypto has earned its place in an investment portfolio I think as more and more institutional investors and the investment Banks start to cover ethereum alongside Bitcoin perhaps we'll see that narrative materialize but what I always go back to is price drives narrative really the story in crypto is always price drives narrative so I think in order for there to be material interest and inflows into ethereum we're going to need to see some relative outperformance compared to bitcoin and we just haven't seen that yet ethereum's really struggled to Rally against Bitcoin well speaking of stories I'm I'm curious about the next chapter in your story melum and what comes next for you uh after now you're an adviser at coin shares previously you were a chief strategy officer at at coin shares what's your next move in the space that's a great question um there's a lot of I'm interested in working on but I'm not going anywhere going to continue to stay in asset management and in investments in the crypto space and when I know Tim you will be the first person I call and I'll share it right here with all of your viewers that is what we like to hear thank you so much that is coin shares adviser malum de Mir with her many interests in crypto we'll keep an eye on everything she's up to next now coming up Edith young joins to discuss the state of crypto venture capital and tether launches a synthetic dollar tied to the price of gold gold which has been hitting records all year long and to access all the latest data and news on crypto check out CRP go on the terminal this is Bloomberg [Music] in many ways they always say that you know kind of the the um the place to understand Bitcoin the least is uh is the United States and maybe the place to understand it the best is Argentina but there are you know you know many places in the world where you just get a different perspective on you know how how value flows um from from person to person and certainly across Europe um it there's there just so many great development teams working on this on this problem and that's ledgers Ian Rogers on the show last week after his firm opened its headquarters in Paris meanwhile Australia du to list its first spot Bitcoin ETF on Thursday the Vanek Bitcoin ETF will debut on the ASX exchange other players buying for a Bitcoin ETF include beta shares and digital X sibo Australia listed a round of Bitcoin funds two years ago and we're going to discuss the best places to invest in crypto with race Capital General partner Edith young her firm's portfolio includes data bricks and salana just to name a few and of course there's a lot going on in the worlds of both of those assets right now but Edith if you think about the way that the ecosystem is involving moving forward people of course in the more mainstream world do look at Bitcoin they do look at ethereum with the ETFs but when you think about the potential for the tokens outside of those two how do you think about where the next big play would be yeah so so first off it's so interesting like for me to hear melum with your conversation uh earlier focus on institutional uh investor point of view but from where I come from sitting in silic and Valley um we we're very paying close attention to sort of like the all coins of the world um the key thing is you know crypto VC is back um I think last quarter is like 2.9 billion which is 20 um been invested to to over 600 um companies and about 29% increase um quarter over quarter which is a great sign but at the same time I think like the mood is a little bit different than before um I was just chatting with um a um hedge fund friends in Asia Alpha 9 was telling me that you know Institutional Investor yes is excited about Bitcoin and ethereum but they do place close attention to all coin but a lot more I guess more Savvy this time and and the key thing is sometimes what Institutional Investor don't like to see which is when a VC uh which mean us invest too much money into hundreds and millions of dollars and when all these tokens are fully vested and unlock is not necessarily good for the all coin so sort of compared to the last cycle which I'm continue to be bullish on salana and I also placed close attention to the telegram ton token and those are really like the two sort of from the last cycle now is still strong and standing so it will be very interesting to see this cycle you know when more and more crypto VCS is coming back to Market is are they being thoughtful about their investing schedule are they really kind of think through the true use case um in the Venture space which you know one of my companies called human Finance is so interesting to see now using stable coin crypto to sort of help with crossborder payment this we're talking about like billions of dollars in transaction so it's really really excited to be back in the market Edith I'm wondering when it comes to retail excitement what you're seeing out there right now and the metrics that you're looking at because I I know it's a cliche but back in 2021 I would regularly get an Uber or a lift and the driver would talk to me about crypto that has not happened since the crypto winter yeah it's it's interesting so I just presented a a Hong Kong web 3 report and consensus uh a few weeks ago the excitement in Austin is definitely not the same compared to Hong Kong or Singapore when I go to other conferences I think yeah I think the US mood in terms of regulatory environment um is not getting the taxi driver excited about uh crypto at all for now but having said that I do think that things are improving because us governments clearly know that we need to do more to make sure that we stay ahead of the game but I have to say you know being a native from Hong Kong originally um every time I'll go back like people are excited I I think in Asia particularly you know regardless is the rwa use case or gaming or nft people are just excited and and there are definitely people on the street um the Hong Kong Taxi Driver are more excited than the American Taxi Driver uh with crypto for sure Edith that's fascinating I want to go back to another thing that you had said here you were talking about Huma finance and uh that you work around stable coins how important is the stable coin world to the broader crypto ecosystem and how vulnerable is it to us regulation I think stable coin worldwide is a super important topic um us in many sense I think you know being sitting in in Silicon Valley we need to get ahead of the game because I'm looking at Hong Kong um actually just launched this year the stable coin sandbox and for the past 18 months or so they literally went worldwide and talking to Circle Ripple uh Visa Alibaba of the world to make sure that government really are on top of regulations to basically have very clear guidelines to approve various different institution to be able to support stable coin so in that sense you know in the crossborder payment if we just purely let other people to Define what stable coin is about it's really not good for the long-term Finance ecosystem so I think us really need to we need to get our act together um to catch up with in Europe with Micah or in in Hong Kong or Singapore which is already have very clear regulation to support it okay you say we need to catch up with Hong Kong Singapore and and Europe what specifically would you advise us Regulators when it came to stable coin legislation what do you want to see them do um I I think just to start with the be a little bit more clear on which way we stand I think it's great to see uh fit 21 that at least go through um the the house but still we we don't know like we we need faster regulation it's just that to the rest of the world us regul regulatory environment always seems a little bit disorganized and a little bit chaotic and I think just to and then I think for the US unfortunately a lot of things are still going to wait and see who's going to get elected by the end of this year I do think that what was really really funny when I was in Austin that that I literally see a both side of the house presidential candidate um actually have a voice uh in a crypto conference which I think that both candidate knows that you know like crypto Now 52 million Americans now own crypto in America this is a really large population that would really swing to vote and but unfortunately I don't see all see all these things will play out until after the presidential election raise Capital General partner Edith young thanks so much for joining us on Bloomberg crypto do appreciate it well coming up why tther has launched a new synthetic dollar that correlates directly with gold prices and earlier this hour we spoke with David McCormack former Bridgewater CEO who is running for a US senate seat and he says America must lead on the way for crypto I was always worried about the National Security implications and I think what's become clear is that we are in the Next Great Wave of innovation with crypto and blockchain and if America doesn't embrace it we're going to be left behind and by embracing it we can uh create great jobs uh a great source of [Music] innovation tether the company behind the stable coin usdt has created a new synthetic dollar that is backed by gold Bloomberg's Mike Regan is here to explain exactly why this is going on what is the purpose of tether doing this of course we know that USD is very popular back by dollars but why then inch to Gold yeah well I think the big picture is tether obviously wants to sort of diversify its business Beyond just usdt um you know there are questions in Europe and elsewhere about what stable coins Will Survive the sort of heightened regulatory environment so tether's making a lot of sort of diversification bets they uh investing in crypto miners they've made some investments in artificial intelligence uh even some medical device uh companies uh and with this project what they're doing uh it's really pretty fascinating they're actually buying gold uh storing it with a custodian in Switzerland uh making tokens that represent that gold so then you can buy the tokens um and basically own ownership in gold in token form then what you can do is you give those tokens back to tether and they give you a synthetic dollar a tokenized stable coin basically like usdt but one that is related to Gold so it's over collateralized meaning say you put uh $100 of gold tokens on deposit with tether they'll give you $75 back so why would you want to do that well if you believe if you're bullish on gold you're happy to own the gold but then you can take those dollars back from tether and go invest them elsewhere speculating in crypto or put them in a lending protocol and make even more yield and returns off of that uh investment in the gold so I'm wondering who exactly this is for Mike if you're thinking about it from the perspective of the organization who are they trying to appeal to with a product like this oh certainly there's a little bit of overlap between people who are you know gold bugs for for lack of a better word and Bitcoin in I was going to say like a a a you know crypto backed by gold it's like you're hearkening back to the you know years ago when currencies were back by gold when the US was on the gold stand right right so I think they they assume there is some demand for this but I think if you take another step back it's almost a proof of concept for them for this new uh platform they have called alloy or alloy I I suppose is how you pronounce it uh like the metal like of the metal yes um and there they have clearly have Ambitions as they've said to do other things like this to tether uh uh tokens to the value of other assets whether it's another currency or who knows you know they haven't explained exactly what the next steps are but they clearly want to make it a broader what's what's the biggest risk behind this well I think um the market risk is the main one obviously if uh if you're bullish gold you might be willing to take that risk but if the gold price does go down then uh what you have to do is either provide them more collateral in the form of that those gold tokens or you get liquidated so that's the you know clearly the market risk is the main thing now obviously there are people who uh still have a little bit bit of Suspicion towards tether itself um but you got to look at tether over the last few years you know there was so much scrutiny so many much mud slung at them but that usdt has has maintained that dollar Peg so um they've earned a little bit of trust in the market I think to for a project like this to succeed Mike just 10 seconds how will we know if this is successful I we'll watch the the amount of money that's locked up in it um you know was just announced yesterday so we'll we'll we'll check back and see uh how many people actually playing in this uh scheme Bloomberg's Mike Regan thanks so much Mike for joining us always good to see you that is going to do it for Bloomberg crypto join us again next week though on Wednesday June 26 this is Bloomberg

Channel: Bloomberg Television

Views: 8,464

Keywords: Bitcoin, Edith Yeung, Meltem Demirors, Michael Regan, Sonali Basak, Tether, Tim Stenovec, crypto, cryptocurrency, stablecoin

Id: Irbt74WB0_g

Length: 22min 6sec (1326 seconds)

Published: Tue Jun 18 2024