Bitcoin (BTC) has gained this week on the heels of increased optimism about the potential approval of multiple spot bitcoin ETFs.
Joining us now to discuss the crypto markets is GSR Markets, co founder and President Rich Rosenblum. Welcome back, Rich. Thank you. Happy Friday. Happy Friday to you. So, of course, it seems uh we, we had this uh rally here in Bitcoin because of some optimism regarding uh the potential approval for multiple uh ETF S. Uh what do you make of that? And the, the um JP Morgan report and, and just the general uh sudden bout of enthusiasm that the market seems to have. Sure. Yeah. First off, I'd say it's certainly positive if ETF approval probabilities go up over the long term because, you know, it's a move towards more adoption of crypto into the space. But I wouldn't say it's, you know, purely a Happy Friday in every sentence. I think part of the rally we're seeing is due to geopolitics and whether the Biden administration stays in charge or we have a shift towards the Republican side. I think the events of the last couple of weeks of increased geopolitical instability are causing a move to the right. We're seeing a move towards building a wall not only in the south, but maybe in the north that's coming from both sides. And I think that last night's speech from Biden is clearly more of one of a war posture on multiple fronts. So I think that's something in addition to the positivity around the S ECs stance, one more of negativity in geopolitics causing a bit to crypto. I do do people in crypto actually care about the world outside. I always feel like they don't uh be because we didn't see this kind of a rally at the very beginning of the conflict a couple of weeks ago. Uh And, and quite frankly, the the Bitcoin prices weren't, didn't exactly explode after the, the invasion of Ukraine. So I, I, I'm sort of wondering why all of a sudden now there's that, that extra, I, I mean, I see it in gold, obviously gold is, is rallying, but it, it does, does the geopolitical aspect have as much of an effect as the potential that people who had invest in G BT C which is owned by Grayscale, owned by uh coin desk, got, you know, show our, our cards here. Um But I is it, you know, wouldn't that have a bigger effect when you have all these people who are so vested in Bitcoin already or, or some method of that looking at this as either an exit strategy or a way to sort of hype up what's going on. Isn't that more important than geopolitical instead of speaking about relative importance. I think you'd go into the, whether something is acute or more macro. And I think, uh, you know, two weeks ago, if there's a, in a, in an attack or, you know, skirmish somewhere that's more acute and you mentioned gold, another market I'd mentioned is oil. That's where I spent, you know, bulk of my career outside of crypto. And when you have there be a specific event somewhere. If it's not disrupting oil markets, it's not going to create a supply shock. But I think here the speech from Biden and also just if you're on crypto Twitter, you're, you're reading Twitter in general, you know, it does seem like this is the closest we're getting to World War Three since I've been alive. And in that case, people are going to want to vote for alternative system if you're outside the US. And currently there isn't another courtesy to go with, aside from Bitcoin, I think that vote is going to be towards a crypto system. I want to turn now to some more macro news, Federal Reserve chairman Jerome Powell Spook at the Economic Club of New York yesterday stating in part that inflation is still too high while Powell did acknowledge signals that inflation is cooling. He mentioned that the central bank would remain resolute in its commitment to its 2% inflation target. What are your thoughts there on those comments? I think that the statements are always going to be one in which they're trying to, you know, calm markets. I think at this time there's a, there's a lot of fear out there. Um, one thing that's a positive in today's markets is that with, um, bond selling off interest rates going up, that's already had an effect of dampening the speed that markets have rallied. So I think that, you know, that's one thing that will, will help the Fed, but I don't think they really have that much confidence in their inflation targets since they've, they've proven over the last few years that they don't really have a good ability to um to make their directives work. So getting back to that macro story, of course, as you mentioned, the potential oil shocks and because it was also uh uh I mean, particularly a rocket firing from, from Yemen that uh kind of expanded the war a little bit in some weird ways, obviously, Yemen, the other side of the Arabian Pen Pen from where the conflict is. Um, did that, does that if you're the Fed and you're looking at this and you're seeing, well, you know what, it's not so much a question of an oil boycott like we saw in the 19 seventies, the two oil oil shocks there, but it could be a supply line issue such as rocket fire on oil tankers, et cetera. And even though the US doesn't import as much oil as it used to. In fact, it exports now nonetheless, it could raise prices globally. Does that have an effect on what the fed? Do you think the FED is looking at this and saying, you know what this is going to cause inflation? We're going to have to raise rates regardless. I think that um, the geopolitical instability and, you know, oil shock and higher interest rates, those are all things that are going to effectively raise rates even if they don't raise the benchmark level. I think they're gonna, you know, hold back the speed of the economy. So I think that it allows them to, you know, reduce the probability that they're going to have to raise. But, you know, they absolutely are factoring in all these things I saw in Biden's speech last night, you know, he's planning to hold Iran accountable for what they're doing and what they, what they might do. So we're basically one missile away from there being, you know, a supply shock which would rattle financial markets. And I think that that would end up causing a net bid to crypto. All right now, coming back to crypto XRP is surging after the SEC dropped their securities violations charges against the top leaders. Do you think that this means this is the, the cc long time case against ripple? And how do you think this is going to impact the markets, you know, even beyond XRP? So we're seeing a bigger move in Solana. I think that there's this, it's a good sign for the market. It's obviously a great sign for the executives, good sign for, you know, the ripple community. But I think there's also knock on effects that if this is a case that SEC is looking to have lost, they're much more like, less likely to go after other players that have a, you know, similar case, uh you know, getting back to this whole ETF business here and this is a question I've posed to others and I'll post to you as well. Do you see potential of the SEC using the ETF as a way to sort of uh backward, you know, grandfather itself to, let's say, or, or somehow, uh retro actively getting involved in the spot markets of crypto uh through side channel if you will by approving the ETF and saying, well, now that we've approved the spot ETF, we should really be in charge of the spot markets. I see where you're going with that logic, but I'm not sure how they'd be policing markets outside the U si think that it's possible to police security part. But if it's a spot market and it's not an ETF, you know, it's not going to be under the purview of the sec. I don't think that there's an argument for them to, to try rich. Thanks so much for joining us this morning and we hope you have a great weekend.