Aug 23, 2023

XRP has lost nearly all gains after Ripple Labs’ landmark court ruling over the U.S. Securities and Exchange Commission (SEC) in July.

Video transcript

Bitcoin and other cryptocurrencies unfortunately remain little changed after the largest Cryptocurrency by market cap. So its worst weekly performance since FTX has collapse. Joining us now to discuss crypto markets is theo trade co-founder, Don Kauffman. Welcome. Don. Yeah, thanks for having me on. I should tell you that there is a movie named after your first name in India. It's called Literally Dawn. But your assessment on Bitcoin's short term price action right now, uh You know, we've heard lots of these kind of assessments but what is it that you're bringing to the table that's fresh original or new? Yeah, there's a few things right now that are rather bothersome on the Bitcoin front. One is of course lack of participation. There's just no question about it is obviously we had a precipitous drop in the last six trading days taking Bitcoin to roughly where it is. When I say though a lack of participation, it's a lack of market participants. Look, I'm a trader, that's what I live on. That's what I thrive on. I need that activity. And I'm not just referencing movement in the marketplace. One of the things that really I think was kind of unfolded, it opened up this door if you will, is this large trap that we had showed that lack, if you will of liquidity inside of that marketplace, what's it gonna take to get more participants? Do you think? So, this is a, it's never a, you know, I guess a wonderful topic to discuss. It's going to be regulation, you know, and this is where a lot of the, you know, crypto enthusiasts don't necessarily want the securities exchange commission all over them. They don't want the N FA which is the National Futures Association all over them. But long term reality they're coming, whether you like it or not, regulators are coming to this marketplace and there is absolutely a positive side to regulation of these products. So I just wanna add to what Jen was asking about. Let's just take three countries, right? The three most populated countries in the world China India is number one, China two and the US is three and all three have basically said, well, we don't like crypto, we hate it. So where are the traders gonna come from? No, the traders are gonna come from uh institutional as soon as the SEC says, thumbs up, you know, you're a security or the N FA actually steps in and says, no, it's a futures contract. Institutional money management comes in right there. I mean, look, that's the background I come from, I had 15 years of brokerage experience on the retail side, uh running large brokers here in the US. So I am intimately familiar with obviously some of the legal recourse involved in this. But the moment they actually say, all right, regulators, we have a product, right? It makes it that much more stable and we'll get market makers in there. We'll get more market participants. Right now. You're still in that stage where, you know, crypto, it's the wild west. No one necessarily trusts a lot of the firms heavily involved in it. I mean, wouldn't it make more sense to have though a brokerage firm where you can trade stocks options, futures, crypto all seamlessly off one front end piece of technology right now. We're completely dislocated. We're all over the place. Look if there's going to be platforms, trade everything at one place. Yeah, but the question here is that, I mean, I think Jen was mentioning this in one of the previous shows that the school of thought is that with, even if there are these po Bitcoin applications that go through or these ETF E applications that go through, um the market may not necessarily like, you know, react too positively. Yeah, sure. There'll be a short term, you know, Phillip. But is it, is it possible in your eyes that the market might, has already kind of factored it in? So we're actually talking about two very different things. Number one is you're thinking about upside potential because firms like blackrock are going to get, you know, a Bitcoin based ETF that's actually not really my reference point. I'm not worried about necessarily going higher or lower just yet. What I'm actually referencing in this case is depth, it's liquidity, its stability of a marketplace. So there are enough bids, enough offers out there. And I'll tell you without un equivocation that if you actually bring in a black rock that is going to obviously create an ETF, it immediately creates arbitrage opportunities back to Bitcoin, which ultimately stabilizes the product with market making firms that are going to come in. I mean, once big market making firms like a Citadel step in to a Black rock ETF, they're going to have to trade, you know, Bitcoin itself, which again, it's going to be more stability to the marketplace that kind of triangulate these arbitrages. That's uh you know, that's my bread and butter out there. And I got to tell you that's exactly what I think I need at this point, moving forward to be a trader more active in this market space. You know, when Blackrock filed that ETF application, there was a lot of excitement, some speculation saying maybe Blackrock knows something, maybe they know what the regulators are looking for. There seemed to be a lot of discourse between the ETF applicants and the regulators and now it seems to have gone quiet and the SEC is delaying, giving a decision on those applications. Are you hopeful that we'll see um an ETF approval by the end of the year. Do you think that Black Rock maybe knows something that the rest of us doesn't? First thing you want to know about major institutions, they know nothing, you know, nothing. Uh This is though a great opportunity. I mean, it's the first large institution that's been able to push through sec regulation and I would absolutely look for approval and on that approval, you know, there's clearly going to be some volatility inside of the Bitcoin marketplace. But again, for me, it's, it's less about that upside potential in Bitcoin. To me, it's much more about market stability. Let's get the market much more stable. Let's get more market participants and a lot of people are not familiar with how this works. But the moment you go in there to an ETF and institutions start investing in the ETF, the ETF creator has to go out and actually, you know, have something physically behind them. Well, that's something physical is going to be Bitcoin itself. And again, there goes your trading activity, we start to build a marketplace, you've got bids, you've got offers. Next thing you know, they're going to be listing options on the Bitcoin ETF. And it's a, it's a way we go, but that's exactly what you want though in this marketplace. So our colleague Sharia wrote the story uh which reflected how XRP has lost nearly all gains made after ripple labs his partial courtroom win against the SEC back in July. Uh There was another judgment after that, which kind of overturned that, but is this due to bearish sentiment in the broader market or some other catalyst? What, what's your take? Yeah. So overall, some bearish sentiment is obviously in play in a very, very large way here. But again, it's a marketplace where I don't think the participants per se feel, feel very comfortable that and you also have to recognize the sec. It's an incredible uphill battle. And right now, when you look at the number of suits with the securities exchange commission, there's only a handful of institutions that are even going to be able to handle, you know, the magnitude of some of these suits. And again, Black Rock happens to be one of them, you know, obviously coin base happens to be one of them, but otherwise it's few and far between and some of the smaller tokens sec goes after them. They're going to get taken apart. I mean, they are systematically going to get dismantled by the securities exchange commission and starting to have to go through a number of appeals. All right, Don, we are going to leave it there. Thank you so much for joining us this morning. Thanks for having me on. That was the trade co-founder Don Kaufman.

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