Spot Bitcoin ETF in the U.S. Will Facilitate Flow of 'New Money' Into Bitcoin: ETC Group CSO

Bitcoin is holding around $26,000. But our crypto traders bracing for more volatility. Yet again, let's find out joining us now to discuss the crypto markets is etc Group Chief Strategy Officer Bradley Duke. Welcome to the show. Bradley. Thank you very much for having me. All right, let's talk about Bitcoin. You shared a chart showing Bitcoin's recent massive la liquidations that happened late last week. Uh unpack what's going on here for us? Well, so we came out of a period of about eight weeks where Bitcoin was trading um between $60,000. Uh And that was, that was really AAA period, which was of of low volatility for Bitcoin, which was particularly uh unusual. Um and then with, with uh some negative Macron news uh last week, there was a, a sell off which was exacerbated greatly by liquidation of some 855 million in long uh long positions. So leverage long positions um were uh were were liquidated as part of this, this price fall, which made the, the price fall even greater. But as you, as you mentioned, since then, we've seen uh Bitcoin stabilize at around 26,000 and that's where it's been over the weekend. And uh and, and the, the early part of this week, what macro news are, are you following? I guess when it comes to the impact on Bitcoin's price, you know, we have rising inflation, the potential to rise rates again here in the US, there's news coming out of China, there have been a bunch of different reasons given for the volatility in recent crypto markets. But which, which one are you particularly following? Well, I'm I'm following. Actually both of those, I think the uh the sort of negative uh sentiment on the the economy in China is definitely one that a lot of economists are watching very, very closely. Um And of course, the, the, the notes that that were coming out of the, the, the fed and, and at a recent uh uh uh speech, whereby there was a clear indication that it's likely that higher rates are here for longer than, than was previously expected, uh certainly helped um tank markets on that day. All right. Uh You know, one of the reasons why it crossed 30 K Bitcoin was because of the excitement around spot Bitcoin, ETF S and Ether ETF S. Um and you're kind of an expert on that, but on the other side of the Atlantic Ocean, uh you guys launched the first centrally uh clear Bitcoin exchange traded product on Deutsche et cetera, the largest ETF trading venue in Europe and have also launched Europe's first metaverse ETF. So why has that not been like that, the momentum of that expectation, has it dipped or has inflation? And these macro conditions just been too important for, for the traders. I, I think a bit of both, I think, you know, there's been a flurry of activity in the applications both for Bitcoin and uh as we've seen recently for uh Ethereum uh futures based uh ETF S as well. Um And, and, and, and I guess from the perspective of the SEC, they don't want to be uh seen as a king maker. I think it's problematic for them to be a kingmaker. Um So it's more than likely that they will approve a bunch of those uh ETF S all together. Um And so, but then the question is there's a kind of a feeling that this is, it's gonna just, this is going to happen. But then when, and I feel that there was probably uh a feeling that this isn't imminent but will more than likely be uh happening probably Q one next year. So pushed out a little bit that maybe some, some people thought, but I think the, there's no doubt that the, the negative macro sentiment that that came through last week was also one of the contributing factors. So I just want to push back on this because it's not clear and, and I, you know, you got it, right? Obviously, in Europe and the S ECs position has been completely different from whatever is happening in Europe. Yet people continue to say this is going to happen, you know, this is likely to happen and nobody is really giving a strong answer to the question. Why, why is it likely to happen? Why is it, the SEC is actually just gonna turn around and say, well, no, we're ok with it. We're gonna actually just give a green light to all of you together that too. Uh There's a gray gray scale lawsuit happening. That's a spot Bitcoin conversation, but the ETF conversation has more confidence around it. The it's a ETF con conversation. I beg your pardon. So I'm just trying to understand like, do you have an answer to why? Like why would they actually like, you know, agree and allow these? Yeah, I, I look, I think when, when we saw uh Blackrock um making filing their, their application and getting that application uh a a approved um uh that, that was a signal to, to the market that something has changed. II I don't know about the back, you know, the backroom dealings of, of the SEC and what is said behind closed doors uh to, you know, incredibly powerful players like um you know, Black Rock uh and, and, and others, but it seems that their entry signaled the fact that there has been a softening of position. I, I would love for there to be greater clarity and greater transparency in the in the the workings of the SEC and especially in this area. Uh I find it quite murky and and quite difficult. Uh it's very, very different from the European regulatory environment which is has got different kinds of problems. But I think the transparency is, is is something that's, that's greater. Uh in Europe is expecting the markets to move on an ETF approval almost too much of a US centric viewpoint like Amata mentioned, these ETF S exist in other places in the world. Like do you feel like maybe these ETF S are going to be approved and the markets maybe not gonna move as much as we think it should. I think that's an interesting question and I, I think one can't discount the fact, you know, the, the US is the largest economy in the world and uh and, and the the investment community there are certainly they, the more sophisticated and larger investors will invest all around the world. But the fact that there is a UU based uh spot uh Bitcoin ETF I I certainly think is going to uh allow it's gonna facilitate a flow of uh a lot of new money into Bitcoin that previously wasn't there because people haven't really liked the structure of the futures based products. Uh Well, don't like it as much as the, as a spot product. Um And, and also there's a lot of people out there who are not, who don't really want to get into the nuts and bolts of how Blockchain works and, you know, being their own bank and, and holding their own, you know, private key. Um And, and so this kind of ETF uh structure really is an enabler allowing um more access uh to, to Bitcoin. Uh then, and, and then uh than being without it. Um And so I think, I think there definitely will be uh a, a price um increase. I don't know, we don't know how large or you know, it, it will be or how small. But I, I certainly think that as simply by the fact that it's enabling uh more access to Bitcoin, uh there will be uh a AAA upward price pressure just uh tell us a little bit about what you think about what's happening with the stable coin market because something big happened, coin based, acquired a minority taken circle uh internet uh financial. And I say this in the context of the fact that in just about two weeks from now, maybe three, we are expecting the FSB and the IMF for the Financial Stability Board and the International Monetary Fund to come up with their own uh well, global standard around stable coins and crypto regulation, but particularly stable coin where there has been a difference between the advanced G7 economies and the emerging G 20 economies and the global South in general. Uh So coin base is going to, you know, has, has obviously like a coin acquired this minority stake, which is gonna give it a Phillip the stable coin market. But there is also going to be this regulation that comes in a few weeks later. That's gonna be like, no wait, we're not that confident about stable coins because they disrupt our economies. Right. Well, look, I think, I think it's quite interesting the, uh I read with interest the, the coin based story. Um and you know, as you know, the two, the, the two largest incumbents, us DC and US DT uh have been challenged recently by paypal. Um in terms of, uh you know, they, they announced that they were entering into the stable coin market. Uh Certainly that's something that you have to sit up and take notice when paypal is moving because they are a very well established and well respected brand and they have enormous amounts of experience in the international payments and Remittance. Uh So, so I think this, this area is, is hotting up what, what that actually means and you know, what the new regulation means in terms of how these players will be able to compete going forward. Uh I think I, I'd be very interested to see the, the, the substance uh of, of the, of the regulation um before I make, make a call. But it's certainly there is certainly a massive revenue opportunity with stable coins, especially given the yield that can be, uh, that can be earned from, from deposits, uh, you know, treasuries and, and, and other risk free, um, uh, bonds, et cetera that government bonds. Um, that, that this is definitely gonna be an area where there is going to be a competition. Bradley. We're gonna have to leave it there. Thank you very much for joining us this morning. Thank you very much for having me. That was etc group chief strategy officer, Bradley Duke.