00:00The decline in the asset price this year, certainly, you know, $126,000. That was a major high earlier this year. That was a big moment for the cryptocurrency. But down close to 30 or more than 30 percent from that. How much lower does Bitcoin go?
00:16I think Bitcoin at this level is finding support in the kind of $84,000 range, which is just about where the break-even point is on most ETF purchases, Bitcoin ETF purchases.
00:32And that seems to be a level of support where essentially people, large investors who are trying to defend their positions, if you would, want to keep it above that level, which if it falls below that, you'd see more sales most probably out of the ETFs back into liquidity.
00:51You know, Bitcoin, it's very much driven by global liquidity. You had expectations of more from the Fed and, you know, more clarity around market structure.
01:04But I think what you really have to look at is there was a huge run-up in the kind of August through September into October period.
01:16And, you know, a number of us felt the market was frothy in the beginning of Q3 and things were getting a little bit overheated.
01:23And, you know, now we've seen some of that come off.
01:27You've also seen a lot of money that rotated into AI now, rotating out of AI and starting to rotate into more Dow stocks.
01:36And so I think you're generally seeing a risk-off environment. Risk-off tends to drive people out of Bitcoin.
01:42But the liquidity that the federal government is going to inject in the marketplace now that quantitative tightening is over, we're starting to see easing again.
01:51And we believe that we'll bode well, the dollar's down, which also bodes well for Bitcoin.
01:57And I think you're going to continue to see Bitcoin appreciate.
02:00But you've got to realize it's a very large asset class.
02:03It's, you know, a couple trillion dollars in size, and it takes a lot to move the price.
02:09And I think what we're seeing now is just some healthy retracement.
02:12Hey, if I may just jump in for a moment.
02:15You know, I am wondering, Fred, you say that it's a risk-off environment, and yet I'm looking at an S&P 500 that's still near its all-time high.
02:26You know, and we've seen quite a bounce back when it comes to the S&P 500, also a very big market.
02:32So I'm just curious, you know, how do you square that if we're seeing investors still willing to move into the equity markets but not crypto, that disconnect?
02:44Well, I think you have to, in regards to crypto, you have to look at the derivatives market, which is much bigger than the actual spot Bitcoin market.
02:53And you have to see the sheer amount of leverage and positions that have come off since the peak.
03:02You know, you've gone from the $90 billion-ish range down to the $30 billion range of open positions.
03:10And so that's a huge amount of leverage that comes off, which essentially sucks wind out of the marketplace.
03:16And people have been moving their money out of Bitcoin and into other things.
03:22I think you've also seen, look at the AI stocks.
03:24Most of the second-tier AI stocks have all seen a pretty large come down since the peak.
03:30Even stocks such as Oracle, look at CoreWeave, you know, look at these stocks and how they've performed.
03:36And I think what you're seeing is a rotation out of some of those and into other stocks.
03:42And Bitcoin is associated with technology.
03:45It's associated with the risk on assets.
03:47And it's very associated with liquidity.
03:49So having said that, and you talked about the run-up that we saw earlier in terms of crypto,
03:56that where it got to maybe like frothy levels, we're now at, what, 87,302 and change.
04:06So what do you think should be the level of crypto that makes more sense?
04:11I think you have to look at the long-term trend.
04:13But more importantly, go back a little over a year ago, go 14, 15 months ago,
04:21no U.S. money-centered bank would deal with crypto-related companies,
04:27nor would they take crypto deposits, nor would they let you trade crypto,
04:31nor would they let you wire money to crypto exchanges almost.
04:34And today, you have every bank, including J.P. Morgan,
04:38now moving ahead and doing all sorts of things with crypto.
04:41So you're seeing tokenization of assets.
04:45DTCC has now gotten a no-action letter from the SEC around tokenizing assets.
04:50You're seeing all sorts of activities around the traditional finance environment
04:55where they're embracing crypto.
04:58And I believe that part of the effect of that is you're now going to see all sorts of things
05:03wrapped around crypto, which will make the space much more relevant.
05:07But it takes time for those products to take effect, get launched.
05:12And I think, again, Bitcoin has had a great run over the past 15 years.
05:17It's been one of the best-performing assets on record.
05:21And I think that we're going to continue to see great performance out of Bitcoin over the coming years.
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