Sep 18, 2023

Bitcoin (BTC) has climbed above $27,000 as U.S. traders pencil in greater odds of the Federal Reserve keeping borrowing costs unchanged later this week and through the rest of the year.

Video transcript

Bitcoin is breaking above $27,000. As us traders see greater odds of the Federal Reserve keeping rates unchanged this week and perhaps for the rest of the year joining us now to discuss is Matrix Port head of research and strategy, Marcus Steen. Welcome Marcus. Thanks for having me. Good to see you. So, you know, we, we look at this latest move up in, in Bitcoin uh above 27,000, it looked pretty dismal. I think even your own uh research uh just a few, a few days ago, it seems would have said quite the opposite that this was going in the other direction. Uh Even though there were some bullish signs nonetheless, it was a, it, it, I don't know if anyone expected this to happen so quickly, but over the weekend, a move up above 27,000. What was the catalyst here? I, is it really this sort of risk on with the fed not raising rates uh potentially at this upcoming meeting this week or uh at the next meeting as well? I mean, you could make an argument that of course, Powell is gonna be a little bit more hawkish, uh, coming, you know, the, this, this, uh, FO MC meeting, you know, we have higher oil prices. Uh, we had last week, of course, the upsides of price in the CP I index, we had, we have a stronger dollar, uh, we have a higher 10 year bond yield. So I think you can make an argument that Powell might be a little bit more hawkish. Maybe the market is not going to buy into it, but of course, he could be hawkish. But of course, the, you know, coin itself has been in a very tight range over the last kind of like one or two months. And the fact is that we are breaking now high. And if you can close here, actually, this sets off all sets off our, our kind of technical trading signals and this actually could be quite bullish for, for Bitcoin itself. But nevertheless, I think we can also paint a bar picture on some of the al coins on Ethereum. So I think it's more like a relative trade. And I think what's very interesting to note here is when we started to break down like last week in Bitcoin in, in the overall crypto market at exactly the same level when when Blackrock announced the ETF, the Bitcoin ETF filing at 25,100 at exactly the same level we heard actually that Franklin Templeton is coming out with, with Bitcoin ETF. So it seems like uh there is a quite an interesting coincidence here at this level that this level is really protected in the market. And it reminds us a little bit of what happened in 2017 with Bitcoin. So I I you you brought up the old coins and there's one in particular Solana, Solana had a nice slight bounce a few weeks ago prior to an announcement since then. Uh It's now the funding rate is now negative uh negative 35%. Uh last data that I have here at the time. They, it and it's been and it's just over the past few days in which the funding rate has gone negative. In other words, people are paying borrowers to go along in uh in, in Salana that and this is, this is just a pretty bearish uh outlook. What is, first of all, what's your take on that slight bump prior to their announce uh their, their partnership announcement? Was there anything involved in um a a, do we know anything about who the potential buyers were? And is this latest selloff or, and this negative out? Look if you will a product of the fear of the FTX, uh uh the, the FTX selloff that will potentially happen as uh a a as the company tries to recoup recoup dollars for its creditors. Yeah, I think of course, that's, that's an overhang and I think the number was a little bit low larger than people initially expected how much actually the FTX creditors can sell. Uh they got the green light so they will be ongoing selling at least until end of the year. You know, we estimate and by the by the $200 million cap that has been uh um kind of flagged flagged by the creditor team and where they got the approval from. But also, I think overall SOLANA is really fighting a little bit for, you know, for, for its existence here, the market cap is still quite high. Um At the same time, you know, the the protocol has still various outages. Um it has really not delivered on a lot of those promises. I mean, you might recall, they wanted to come out with a Solana uh phone beginning of the year and it came out. I mean, nobody has heard of it really or nobody is using it. So, and I think a lot of those, those NF or high frequency trading has actually moved to, to other venues. So I think Solana itself is, is a very high beta and it's quite, quite at risk of of breaking down lower Marcus on the topic of this appending alt coin crash. You also said that crypto VC funds are under immense pressure to return funds to their investors. Um What do you what unpack that for us? What is driving this pressure? Yeah. So for example, a lot of investors have of course made huge returns in in those crypto VC funds, you know, over the last few years, I mean, some funds are up, you know, 10, 2030 times, but of course, they have given back a lot of, a lot of the money as well. And I think now some investors say, well, maybe now we're going to redeploy the capital into another area, maybe in A I, so we rather cash out here. And of course, those we see funds, they are early investors in in various projects. Be it a infinity? Be it be, you know, for example, a coin and these unlocks uh are happening, you know, we had one over the weekend. Um and when we flag this, for example, a month ago, the acorn is actually down 30% right? And this despite, for example, that Bitcoin is more or less, you know, held up. So we like to really pair, you know, certain tokens against Bitcoin because we have, of course, a lot more uh buying pressure potentially uh through these ETF S announcement. And when you, when you look very carefully, Bitcoin actually peaked out so far this year in July versus EUM peaked out in April. So you really can see that all these announcements about Bitcoin ETF S have really not really been been benefiting with these Al coins or even Ethereum. And then of course, ec MS revenue has been dropping now for three consecutive months. And I think this just shows that people are not really engaging with Ethereum or other um kind of like al coins. And I think this just sets a negative um you know, precedent for those protocols. But going back to your question is really, you know, if I'm ABC investor uh or if I'm an investor in ABC Fund, of course, I would like to like to have some, some payouts now and every time these unlocks are coming and these unlocks coming really in, in large numbers, for example, last weekend, you know, it's around like 11% of the, the market cap of a coin unlocked. So I rather, you know, encourage, you know, my, my BC manager to come of sell the tokens and distribute the money back to, you know, to the, to the, I guess to the LP S and of course, in a, in a month's time, we have uh you know, another unlock for a infinity. And these, these unlocks are really uh tokens that the VC investors, you know, got over the last few years and they're certainly, you know, investing now. And so I think there's this constant pressure now uh for those tokens to really just uh see a lot of liquidation happening. So bottom line, do you see the al apocalypse, the, the, the end or the pretty much the end of alt coins coming up? And if so how soon? Well, I think, you know, of course, you know, it helps if the over crypto market was lower than for, to call for a Bitcoin crash. And as long as, or for a crypto crash, but as long as of course, a Bitcoin stays above 25,000, I think we are sort of in a, in a safe or in a neutral zone. But as soon as we, we get closer to this level, I think the risk is, is really high. Um, and I think you also have to look, you know, what was the real, the real driver of the last of the last bull market? And I think of the 21 bull market, there were two drivers, there were, of course, the yield farming craze. Uh, this was really like a child of the zero interest rate policies and we are no longer in this environment. So it's unlikely that those, uh, those yield farming tokens, you know, really come back in a, in an environment when interest rates are very high. Uh, or the other factor was, of course, the second leg of, of the 21 bull market was, of course, the NF uh, but so far, I mean, you know, we, we know all the volumes of NFTS and uh, the correction keeps on going lower. So I think those are, are the ones that are really at risk, anything around Gamification, anything around, um, you know, NFTS and anything around yield farming. I don't think they want to come back in any new bull market. I mean, I'm still quite constructive on Bitcoin overall. And I think we we're gonna have a new bull market uh you know, into next year, but I would be very careful with some of the dialings of the previous bull market and especially with some of these al coins that are seeing a lot of unlock happening. Marquez. Thanks so much for joining us this morning. Thank you. That was Matrix Port, Head of Research and strategy Marcus. Th.

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