Bitcoin (BTC) broke above $42,000 for the first time since April 2022 earlier Monday.
So joining us now to discuss the crypto markets is innovating capital, general partner and Pastel Network co-founder, Anthony Georgiadis. Welcome back, Anthony, thanks for having me on. Glad to see you again. So Bitcoin breaking above uh that 40,000 mark now as a forehand uh last we checked uh what do you think is driving this year? Yeah, there's a, there's a lot going on right now. It's obviously exciting to see. I think first and foremost is, you know, you mentioned obviously the terror collapse of a couple of years ago and really how we haven't seen these prices since pre terror. But I think, you know, really what to go back in time a little bit here, what's been driving the price um downward and what we've seen in terms of a lot of the overall selling pressure over the last year or so. And really what drove the tar collapse has been obviously a lot of hawkish policy from the fed. I think over the last several months, it's become very, very clear that monetary policy has probably reached a point of of tapering. We're going to start to see potentially rating rate reductions and a couple, excuse me, couple rate reductions next year. Um With CP I and and corn actually really cooling off in a positive way in tandem with that. Um Obviously, you know, you can look at the price of gold in the last couple of days here, we have increasing global pressures around the world, increased macroeconomic strains and you know, in tandem with some of the shift in monetary policy, um a lot of institutional investors in sovereign states are looking towards more safe haven and deflationary assets in terms of overall portfolio allocation and broader diversification. The last point as well as obviously a lot of the broader sentiment. Um that's really kind of ramped up with regards to some of the ETF applications and potentially regulatory softening that will pave the way for those applications to really be pushed through and you know, to make it clear spot. ETF S not necessarily the traditional futures based ETF S that we've seen historically. So this is this is the part that I'm trying to grapple with here. Gold, as you mentioned all time, high gold is the ultimate safe haven since I don't know, uh Sumer Sumerian Times. I mean, this is this is where people went Bitcoin for several years was considered the ultimate risk on asset. It was a bet on the future of money, a different type of money. Yet they are both now at all that they're both now at highs. I don't want to say Bitcoins at an all time high, strip away the bubbles of, say US T and the bubble of FTX and all of a sudden you've got, yeah, one could argue that this is maybe more of a real high than those highs before I'll get to that in a second. How does that make sense though? Risk on versus safe haven both at highs at a time when the fed? Even though, uh, we're, we're talking about maybe this might be uh the, the rate hikes might have come to an end. We're not 100% certain because Powell said, don't take that off the table yet. It doesn't all jive does it, is there something else fundamentally happening in crypto other than the spot ETF argument? Because that, that's a different story as well? But is there something that has to do with the market structure of Bitcoin and how and how it's traded such as the change in what's going on in the largest centralized exchange? Binance having an effect on the price now? Mhm. Well, you know, first, even with an asset like gold, it's not as clear cut and dry as safe haven versus risk on right, in a lower interest rate environment, the opportunity cost of holding a non-interest bearing asset such as gold is dramatically reduced, which is why we've obviously seen historically speaking and right now, um with the forward looking forecast of potentially rate reductions, the spot gold prices reaching record highs. And you put that in tandem with obviously some of the global pressures that we discussed and really the appetite towards moving towards something that is very much so a safe haven asset. Now, with respect to Bitcoin, it does certainly demonstrate those very two distinct characteristics. When you're buying into Bitcoin, you're buying into the potential future growth that an asset such as this might hold, you know, the world of web three digital based economies, uh peer to peer transactions, whatever it might be. And obviously, that behaves very much similar to a tech equity with a certain level of risk on characteristics. And it's going to stand to benefit from monetary policy that's moving towards Dovish sentiment on the flip side. It's very clear that Bitcoin and it happens with, you know, every having as something that's actually coming up. Um in April of next year, Bitcoin has taken on the characteristics of truly being a deflationary asset and decentralized money. Um obviously on the backing of the financial banking coll that we saw earlier this year with continue global tensions across the world. Um whether it's in Asia or Europe or wherever it might be, there is a strong sentiment and demand to diversify away from sovereign bank based currencies directly. So I really think the important thing we had one whale by about half a bi it seems and this is from uh stuff that we've reported on coin desk, we had a whale by about half a billion dollars worth of Bitcoin. And I think this is what I'm getting at. Um That, that's, that's not small. It's on the other hand, relative to the rest of the assets in the world, half a billion dollars that, that's pocket change uh in, let's say treasuries nonetheless, in Bitcoin, that, that matters what is going on there. That's, that would cause one particular whale or, and by whale, it could be institution, it could be whatever, what would cause one individual buyer to go out and purchase that much Bitcoin unless there's something going on other than it doesn't seem to jive this idea. Well, it's macro it's micro like what's going on, do we know? Yeah. Well, I mean, listen, I mean, the the tip of the curve here is that we are looking like we're going to be seeing a 180 degree uh reaction in terms of monetary policy. So I think building up to that and obviously the anticipation, you know, if you look at where the yield curve is right now, it's very clear that we think and obviously private credit has been a tremendous beneficiary of this as well. Um It's very clear that rates are probably going to come down much faster than we anticipated and there is going to be massive risk on sentiment moving forward. You know, I do want to make a point though, you know, as you mentioned, with some of these whales that are going out and acquiring a ton of Bitcoin. What's unique about this is yes, there is that speculative component here. But I think that there is also the long term asset positioning in portfolios that is taking place today that may have not taken place in previous cycles. And what I mean by that is I am getting calls from some of our investors for the first time ever. Not asking me necessarily how to go buy Bitcoin, but how to actually self custody it because they're looking to acquire Bitcoin, they're looking to take it off exchanges and hold it in cold wallets with the purpose and intent of holding it really into perpetuity. And I think it's a very distinct phase that we're in right now in terms of how institutions and investors are obviously thinking through portfolio positioning, but also through the actual acquisition and long term exposure to this asset class. I want to talk about Ether quickly before we wrap this. It's also up almost 4% this morning, up over $2200. What do you think is driving interest in Ether? Especially since NFT indexes are down NFT volumes are down and during the last last bull market, the narrative between Ether and NFTS was very different. Mhm. Mhm. Well, one thing I do want to note is that the NFT market is seeing a bit of a resurgence specifically within the Solana ecosystem. So yes, there has been some contraction with respect to NFTS and the Ethereum ecosystem and has, as we know them today. Um you know, that being said in the world of Ethereum, um there has been a ton of innovation and marketable opportunities with respect to layer two scaling solutions um as well as a variety of web three applications. Ethereum is, you know, really this global computer of sorts that's gonna power the next wave of internet based businesses in this web three world. And I think for the most part, we've seen a tremendous amount of broader user growth, not necessarily specifically in NFTS, but across defi gaming, real world applications um as well as technological advancements that make a lot of these applications much more competitive with the broader web two world. So a lot of that is coming together right now and I think that the market is certainly paying attention to that.