Bitcoin (BTC)'s price has risen roughly 13% in the last five days, amid excitement around spot bitcoin ETFs.
Bitcoin has risen roughly 13% in the last five days. The excitement around spot Bitcoin ETF S joining us now to discuss the crypto market is Ba Ban binary and Capital Management Chief Investment Strategist Victoria Bills. Welcome back, Victoria. Thanks for having me. Glad to see you again. So uh yeah, as as we said just now a second ago, uh a lot of excitement around the ETF and that seems to be uh what's spurring it. Do you, do you think that that's really the case or any other factors involved here? I definitely think the spot ef is playing a factor in the current spike that we are seeing in Bitcoin price, especially since it was originally when we first started talking around 29 and now it's up almost close to 34 spiking at 35 almost a couple of days ago. That definitely has a factor to it. And when you think about also what's going on in the US markets and the macro economic environment right now, Bitcoin is up relative to us stocks and a lot of that has to do with what's happening right now with the treasury yield and that playing a factor in the bond market as I've talked about very previously in other segments, crypto tends to trade in an inverse correlation to stock markets and into stock markets particularly. So when stocks are down, Bitcoin seems to be up. And if we look at the year to date price, we're looking, we're seeing that crypto is up almost 100%. Whereas if you had invested in the S and P 500 it's about 7.8 or almost 8% year to date. So, if someone is looking for opportunity to invest crypto, honestly, if you had started at the beginning of the year, would have been the better bet that that would be if we start at the beginning of the year. Of course, hindsight is 2020. And here we are now, um looking though at higher interest rates at a time when inflation, I don't, it's not at 10% anymore. It's, it's definitely under control and we're almost to the point where the risk free rate, less inflation is almost uh you know, a couple of percent here. Nonetheless, that's a higher hurdle rate for risk uh for risk returns, uh risky returns. So what happens? I mean, like it, it, it, it's, it kind of seems rather uh counterintuitive to see stocks go down when rates are up at, at the same time, Bitcoin going up when rates are up, when you would say, well, stocks are risky. Bitcoins risky rates are up. That means means you need a higher return. How does that work? I mean, it's, it's, it's not inflation play, that's for sure. Definitely not an inflation play. But the way that it typically works, if we're looking at, again, macroeconomic factors, so inflation was at around 10% if we're looking at close to 2022 or even. Um, now I believe inflation is close to around like the 3% marker, which is close to what the fed's target rate is. The fed is going to do everything in its power to try and get that inflation down to 2%. And the levers that they have to pull for that is by increasing interest rates, increased interest rates means increased yields on bonds. When bond prices go up, that means that the cost of borrowing goes up for the not only just the average consumer but also for companies as well. So when companies are essentially facing those high rates, the same way that we are just for cost of borrowing to do R and D, they, there's a lot of things that can come into play. But what we're seeing in the stock market right now is corporations have record shareholder profits. And essentially what that has translated into in short is that they've passed on that cost of borrowing to the consumer when that gets passed on to consumers. That's where you're seeing again, that record shareholder profits, that's going up despite overall the market being deflated. So this inverse relationship I think really plays into a factor of like when stocks are risky is also relatively risky as well. But it's considered as an alternative asset versus the US economy. Whereas people see stocks as well, if stocks are doing bad, that means that the US economy is doing bad. If I think that the US economy is doing bad, then maybe I should be getting into something that's not necessarily tied to the US markets. That's where crypto and other alternative assets kind of come into play where people see that as a, again an alternative to what we would usually see. You know, we've been talking about Bitcoin so much. I'm curious if you're watching any alt coins, um any alt coins in particular. Well, unfortunately, I personally don't invest in crypto, but I'm always fascinated by what's going on with E. Um I'm also very fascinated with what's going on with Bitcoin in general, especially when I'm seeing what's happening with the spot, Bitcoin ETF. So we just saw that the DTCC is considering a eight or nine spot ETF S to come into market over the next couple of months. And with those ETF S coming into the market, that's going to allow for further liquidity and direct investment without having to own crypto assets um in a physical wallet. So when that happens, honestly, that's just to open up the market to crypto to more of the average investor, more of the lay investor. And personally, I remember when I first started coming on to these segments, you guys were asking will Bitcoin ever reach the 50 K mark? And I think that honestly, with the emergence of these spot Bitcoin etfs, that's where you're going to see the rocket ship coming. Something else you've been watching closely is the FTX bankruptcy developments. Talk to us about why you're watching those uh so closely and why you think that they're significant. So, and I we also had um another colleague come on earlier today talking about Sam Bank greed taking the stand today. It will be very interesting to see what he has to say or kind of what the tran what the transcripts say after the fact. For me, the bankruptcy is very important because as some of you have been following or some of you have noticed um FTX originally filed for chapter 11 bankruptcy in Bermuda. So some people kind of attribute that or said immediately that that means that FTX is gone entirely. I disagree. And the reason why is because chapter 11 bankruptcy, let's keep in mind is just a way for corporation to allow for restructuring reorganization and to pay back their loans or any sort of initial debts that they have to their borrowers. So what that means is, and especially if we look at what's been happening recently that they've been selling off some of their coins selling off some of the or putting on to block, putting back onto the Blockchain, some of the stuff that they've had in their cold store wallets, that means that they are looking to sell off some of those assets. And by selling off those assets, they can therefore pay off some of their debtors and they can also hopefully be able to recoup some of those assets to pay off FTX users. The good news about that is that, that's basically how they're going to be able to pay, pay those individuals off. But it also means that when you're in chapter 11 bankruptcy, that this is just a method of reorganization. So there is a chance that FTX might honestly come back with an entirely new leadership, depending on how this trial goes and depending on who gets convicted at the end of the day. But, but isn't it sort of like Enron coming back? I mean, like the name has really, really II, I don't know if I call up my advisors and I'm like, you know, it would be a good idea. I this is, this is exchange FTX. You heard of it? I'm gonna, yeah, they had problems before I'm gonna put some money in it. Iii I would suspect even if you know, it has new managers and everything and, and you could have, you could have, it could be run out of Gary Getler home computer yet. It's still kind of like this might not be something that people will rush to goodwill that it might show up on accounting, but it also, there's something behind it. Right. We, we see the, the, the value of the brand equity completely collapse and this trial certainly doesn't help. Is that a realistic expectation or it is a more likely expectation that they chop it up into pieces. Uh certain aspects such as uh licenses if they had any uh, software, etcetera and, and dole those out to, to the highest bidder and just wrap it up and call it a day again. Both of those are absolutely a possibility. We've seen zombie companies as I like to call them, come back from the grave before. Um, I'm thinking about like recent bankruptcy scandals, the Boy Scouts of America, they're still around today, even though there was an entire scandal surrounding that. Um, some of the back in 2008, 2009 with a lot of the companies that filed for bankruptcy, they just simply got merged into other corporations. And so they're essentially under a larger name. So if it gets chopped up and sold, I wouldn't be surprised if, for example, a larger player might come into play chop up those assets and take the comp and take the company for its bits and pieces. I also think that there is, again, there's always that possibility that, you know, the name is definitely tarnished, but if they came back and they said, hey, we got rid of the guy who lied about assets. We've decided to put more stop controls in place. So that way we have more trust and more reliability on behalf of our client. Then I think that there are some people who honestly might go back to FTX, would I personally do it? There's always that there is always, I mean, if they go, if they decide to go into real estate in Bahamas, then they got a leg up because apparently they're really good at picking out real estate. They have some really lovely houses that Airbnb might be interested in purchasing, right? That could be a new business and that kind of works out for everyone, doesn't it? And I had a reputation in that market. Absolutely. And um I also, so the original drawing that I saw of FTX, I just wanted to add you guys kind of missed the Afro on that. So I thought he, he, he, he cut it, you know, clean it up a little bit for clean up, clean it up. But I appreciate the uh that, that's, uh that's quite a, he looks like, you know, the classic messy, just woke up. Look on him quite an afro. It's sort of like a, I'm not, I feel Cosmetology School Victoria, we will, we will add that to the collection of amazing drawings that have been uh debuted on this show. Thanks so much for joining us this morning and giving us your insight on the markets. Thanks so much for having me that was ban on capital management chief Investment Strategist Victoria Bills.