Oct 2, 2023

Bitcoin (BTC)'s price climbed above $28,000 on Monday, logging its highest prices in over a month as analysts pointed to ETF optimism and seasonality as a few reasons behind the gains.

Video transcript

Bitcoin has logged in its highest price in over a month as analysts points also to Et F's optimism and seasonality as if as some of the few reasons behind the gains joining us now to discuss the crypto markets is dexterity, capital, part managing partner, Michael Sahai. Welcome back, Michael. Hey, thanks for having me back. Good to see you again. So why do we have this uh rally? Is it just because the SEC can now uh get back to work if you will and approve this ETF uh that, that uh that the likes of uh uh uh of Black Rock have filed? Is it because we have all these other ef these futures efs that launched today? Is it, what is it that's going on? That's, that's spurring all this, you know, I think that's right. And I've talked to a lot of the institutions in this space over the past few weeks and they've all been saying, when are, when are these ETF S coming? Are they coming in October or is it gonna be Q one next year? And with the impending shutdown, most of them were pessimistic, it was going to happen this month, but that has suddenly changed. It actually caught the market off guard. And so what we saw last night, I'm in UK. So that's last night for me, we did see a spike in prices and, you know, ETF S are great news for the market, I think generally. And, you know, they, you know, obviously we, we have, uh, other, other things is that, uh, you know, we're, we're looking kind of, well, the, the ALS also suffered. I, one would say over the past uh few months, uh a lot of, a lot of the oxygen has been sucked out of the room. And when it comes to crypto into Bitcoin, yet volumes in Bitcoin itself almost flat. This is the lowest we've seen them in something like five years. Does this change the story at all? Not just for Bitcoin? And, and if there's a potential ETF we expect spot volumes might increase with that if there's obviously more players in the spot market? But does that change the, the, the, the story for the Al or will Bitcoin continue to suck the oxygen out of the room? You know, I think the latter is correct. As I said, the ETF S are great because they create a sense of safety. They bring some institutions back to the table who left last year and it legitimizes the space further as it kind of grows up and matures. But the truth is if you look back on crypto rallies in the past, they're driven by retail traders, trading on crypto native exchanges, the bins and the coin bases of the world. And again, the last two bull runs have been driven by alt coins. That's what get traders excited now here. Ok, great. You can get some Bitcoin and you can get some ether by ETF S. But a lot of these traders already were doing that. They were just holding a spot in their own wallets. So we expect a little bit of price action and we've already seen that just last night. But the narrative that's really gonna bring the next bull run has to drive all of crypto, not just this small corner that is ETF for the two oldest coins that everyone still trades. We need new stuff and we need new narratives. Let's talk about the government. Now, Congress just passed a bill to keep the US government open, avoiding a shutdown. You say that the US government problems aren't going to move the markets like they did a year ago. What do you mean by that? Well, you know, the government's gone after a few players in the space over the past year. And surprisingly, they've had some embarrassing losses and the government, they don't go to trial unless they're pretty dan confident they're going to win it. And that's not been the case this year. So I think they're kind of licking their wounds and eating a bit of crow plus we've got an election next year and nobody who's running for office wants to be associated with crypto problems or SPF or any of that stuff. We're likely to see a change in the Guard anyways, regardless of who wins the election. So there'll be different people in the seats that are driving these conversations and they may not have the same ax to grind that some current politicians do with crypto. I kind of want to go back to this uh thing that you said here about uh needing a new narrative because one of the big narratives that's going on in crypto right now is that when the ETF S come, the institutional players will come, there'll be a big, it, it'll change the face of crypto. It'll finally get that institutional acceptance. We've seen legal, we've seen basically a an ETF in Canada and uh you know, I think Jen Jen can buy it from uh from her accounts. Uh All she wants, we are, we're not seeing that kind of institutional interest that you would expect in Canada. I mean, granted it's not the size of the United States, but we're not seeing a flood of, of institutional money going into ETF S in Canada for say spot Bitcoin or for Bitcoin ETF S. What happens if we don't get that in the spot in a spot, Bitcoin, ETF and a spot Ether ETF. What happens if the market just doesn't have any enthusiasm? What is, does this completely blow the wind out of the sales with, with crypto and actually getting back to this whole idea of the new narrative, does that increase interest into the ALTs? Well, you know, I think what we've been doing for the past year at crypto is we, we've kept on trucking. There's not been a lot of price action, things feel pretty range bound and you can be pessimistic about that as a trader, it's kind of boring, but at the same time, this is what mature assets are supposed to do. They're not supposed to be super volatile. They're not supposed to have swings of several 100% during the course of a year. And maybe this is just a symptom of this asset class blowing growing up. You know, we went through the terrible twos in the past few years and we're kind of breaching maybe adolescents or even teenage where kids are a bit more predictable, still nutty, but, you know, you can have a handle on them and you know what's going to happen. So there is a silver lining here, even if these ETF S come out and they don't massively drive price changes. That's kind of ok. That's what assets are supposed to do. They're not supposed to be all over the room. Crypto clerisy. Yes, that something we certainly needed last year. You, you talk about less interest in als and needing um, something new to drive the next bull run. Do you think that this is all just indicative of the industry maturing and maybe we won't see, um, the type of interest we've seen in, in new alt coins popping up like we've seen in the past. I think it's a hard time for all coins and we've seen a number of coins launched in the past year that didn't get the water embrace. They were hoping for that being said there are still excitement about things like Atos and my and we've also seen some decentralized exchanges emerge kind of like GMX or Vertex and certainly Dyd is still doing very well. So there are still projects coming. But again, there needs to be something bigger that drives it. And we saw it two years ago with lending becoming interesting and people got into all those kind of AM M pools that was exciting, that was new, that was novel. And so what I think crypto needs is some novelty, but it also needs the macro kind of wins to change here. Capital needs to become cheap again for people to go for these long tail risky assets. And I think that's what we really need to wait for the capital. I I, is it just because there's that capital costs going up with higher interest rates that's driven money out of crypto or is there a shiny new risk thing out there? Uh It used to be the pot stocks now it's a I uh ha ha has kind of the risk capital, not just gotten expensive, but also just sort of looked at crypto and said, you know what? I, we've, we, we've taken the blood out of this stone. Let's move on to the next pretty thing. That seems to be a I Yeah, and I think that's 100% correct. Crypto was the hot thing every VC was talking about for the past few years now that A I is here, all the V CS are looking there. And if you look at Y Combinator, for example, they are not launching as many crypto projects as they once were, all the focus is over there. So people are very excited about API and again, excitement needs to drive crypto. So something new has to happen and I wish I knew what it was um because I'm not gonna retire. Um But sadly, I don't know what's coming, Michael. Thanks so much for joining us this morning and providing that insight into the markets. Thank you. That was Dexterity capital, managing partner, Michael Sofa.

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