Sep 11, 2023

Bitcoin (BTC) remains under $26,000 as investors await fresh U.S. economic data this week.

Video transcript

Bitcoin remains under 26,000 as investors await fresh us economic data this week. Joining us now to discuss the crypto markets is Maple head of growth and capital markets. Quinn Thompson. Welcome back, Quinn. Yeah, thanks for having me. Good seeing you. So, um you know, before we get into this whole discussion of uh some of the, the CP I and PP I data that we're gonna have come out this week. Uh You're, you're kind of looking at the ETF news and you see that as a as I I as it's kind of the next big thing happening here, particularly uh a spot E ETF for, for E, you know, we're as close as possible uh that we've ever been to a Bitcoin spot ETF with the, with the latest ruling in the federal courts against uh the sec regarding gray scale, why the, the market hasn't really taken off since then? So what is it that, you know, that the rest of the market doesn't? Yeah, I mean, so the ETF is definitely the, the, the biggest news I'd say holding the crypto markets up today and, and probably over the next coming months the difficult part is it, it creates a better conduit for, for capital inflows into the space, but you still need that catalyst for those inflows. And if you look at, you know, interest rates are about up about 50 basis points since uh Bitcoin's most recent local peak at 31 K, uh you know, liquidity and capital inflows continue to kind of decrease. And so we just haven't seen a catalyst for people to get excited. There continues to be quite a few headwinds whether it's B news, other FTX type of cell pressure. Uh No one really wants to step in. And if you look at the trading action over the last few, few weeks and months, you know, it, it tells you that much. It's, it's everyone's pretty apathetic towards, towards crypto at this stage. We're, we're, we're, we're expected to get some PP I and CP I data this week. Uh As you know, obviously it's the end of August is now behind us. So we're gonna know what's going on there. What exact, you know, where do you see that falling? Because that of course, is going to dictate where interest rates are going to go or at least give a hint as to where interest rates are gonna go. What, what's your bet? Yeah, I think the, you know, I'm not, I'm not sure about this exact print, but if you look across the commodity complex, I I it feels that, you know, the economy is not as weak as, as people might be thinking, you know, labor data has been mixed, uh inflation data has definitely come down but, but very well could have seen a bottom over the summer and, and commodities due to, you know, recent, recent supply issues. And despite all the talk of China and, and the rest of the world being very weak, uh you know, you can look to commodities as, as being pretty strong here. And so my gut says, you know, we've probably seen a local bottom in inflation and, and one of the things causing weakness in tech assets over the last couple of weeks is, is those rising expectations and, and interest rates coinciding with it. Yeah. Now I'm surprised Lawrence didn't ask you this about ETF S. We've had spot ETF S up here in Canada where I'm sitting right now and the excitement hasn't been there. So, I mean, what do you do? You really think it's gonna be this, this big catalyst that everyone is thinking it's gonna be given that it's been available in some other parts of the world. And the excitement has kind of just been exactly how the markets have looked over the past few weeks. No, that's, that's very accurate. I mean, as I kind of said it, it, you know, it, it's not an instant rep pricing of, of the space, but you would expect some uplift in prices as you know, it creates a, you know, better, better avenue for, for capital inflows. If you think across the US, there's, you know, hundreds of billions of dollars managed by Ria S wealth advisors and other asset managers who physically cannot access uh digital currencies, Bitcoin Ethereum. And so the ETF really allows that access to, to be much improved. And, and also, you know, if you think of a traditional wealth advisor in, in a regional part of the States, they can't make money. If they, they tell their clients to invest in Bitcoin, they have no way to, you know, it has to be done through traditional uh investment routes and, and getting an EPF approved will, will allow that to be supported in, in, you know, all these different accounts. So I think it is big news. I just, I just think there needs to be other uh catalysts to get the space going again and, and we'll see how big, I mean, do you have an estimate on, on what you think will ultimately take up? Uh the TFS? How, how big do you think are we looking at here? Because, I mean, the Canadians haven't been impressive as usual. Yeah. Well, the, the Bitcoin futures et FBI to is, is been pretty successful, I would say for the type of product it is. Um I, I believe that's about a billion. The, you know, just look to the gray scale uh G BC. There's I believe about 16 billion at, at today's prices uh locked up there. So tough to say the discount's still there. Um You know, and, and so there could be some outflows if, if it returns to NAV, but, but overall, you know, I, I would expect over the coming years is to be 30 40 50 billion. And, and um you know, that that's a meaningful size of, of the overall crypto and Bitcoin market at, at this stage. Yeah, and talk to us about some of the issues challenges, I guess when it comes to capital flow right now in the digital asset space. Yeah, I mean this the stable coin supply is probably the easiest gauge you can look to there's other some fun metrics um that, that some people post but overall, it's, it's pretty bleak and US DC supply has been been cut in half which is kind of the western regulated stable coin. Obviously, Tether has been uh pretty strong in its growth which you know, take, take of it where you will. But overall, uh you know, investment and you look at venture capital raising uh that it's continues to hit new lows, trading volumes continue to hit new lows. And so there's just this kind of lack of, of excitement and and broader interest in the space. I think part of that has to do with the regulatory uh nature. But, but you are starting to see the currents kind of shift underneath where some of this, you know, or, or less value or creative building and, and project use cases are being washed out. You know, you're seeing more and more startups, kind of shut it down where they haven't found product market fit and, and fail where they haven't been able to raise additional capital and that's healthy. You know, it's unfortunate, but, but, you know, venture capital is a, is a type of investing where you, you hit a home run on one or two of every 10. So I think it's a little return to normal and, and you know, we're starting to see that capital then float to the more uh you know, a creative and u real use cases like stable coins, payment rails and, and that's one bright spot, transactions across stable coins have continued to increase despite, you know, the broader Bitcoin weakness. So I think that's kind of what will lift us out of this, this bear market is, is, you know, big players like visa and other payment companies start to adopt these rails and, and that just continues to onboard new users into the space. Quinn, thanks so much for joining us this morning and taking a look at the markets with us. Yeah, thanks so much. That was Maple Head of growth and capital markets, Quinn Thompson.

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