Transcription
Bitcoin continues to struggle as it falls below 100,000. That's amid a sweep of risk aversion across markets. Crypto market remaining under strain with some $19 billion in liquidations in turn erasing over a trillion dollars from the total market cap of all cryptocurrencies. That is according to data from Coin Gecko.
And for more on the themes that we are seeing in crypto markets, let's welcome in Avala Labs President John Woo. So John, let's talk a little bit just about the the setup right now that you're seeing uh across the market broadly. And you know, we had a discussion here yesterday on Yahoo Finance. Someone was like, "Hey, it's only been like four, I guess five Fridays from today that we saw that massive dislocation on that October 10th date. We still haven't really, it seems, healed ourselves in the broader crypto space since then. Does it feel that way to you guys?"
It it's still in the process of healing from the acid class perspective no doubt. Um, I think what people misunder sure there was a a flush so to speak on October 10th, but reality is over the last 6 months, maybe even a year or so, there's just been so many new instruments where people can access the crypto asset class, whether it is ETFs, whether it's these digital asset treasury companies or even IPOs like Circle, Figure, um, or or, um, you know, Gemini, all of these new securities. It's just a lot of supply into the market. Plus, there's a lot more tokens as well, and there's just not enough demand to absorb all that. And the irony here, it's all happening when real world use and adoption is happening. From the JP Morgans to the Black Rocks to basically almost any industry you talk about, there's like brands using the blockchain technology to streamline their processes. So, it's ironic just as adoption is happening, the asset class is struggling a bit.
>> Yeah. Let's talk a little bit about what's happening specifically with altcoins. I think on this program we basically just look at Bitcoin which we're going to talk about in just a second, maybe a little bit of Ether here and there, but it's mostly Bitcoin as gold, etc. um in those smaller crypto markets uh the layer 1 protocols um you know as you and the experts will will talk about and and even smaller than that what has that price action been like and what's the feedback there between the price action in the token and then how much you know activity is happening onchain and just where is that space right now for our audience as you guys see it
>> well I can speak for Avalab's Avalanche you know Avalanche is a layer one protocol and Avalabs the team behind Avalanche always had the mission of creating real world use cases and the activity and partners that we're working with to create those use cases is absolutely going higher while the coin obviously is not doing great. So there's a big disconnect. Um I can't tell you why that is except for the fact from the on a meta level there just too many options now of new tokens, new DATs, new ETFs for the whole space and new public companies as well. But I can tell you from my day-to-day, my conversations with brands, with Trafi, meaning Wall Street, they only increase and the activity we're doing with them is also increasing.
>> So, speaking of that adoption and where it sits within the financial stack, we talked to Michael Sailor yesterday. He expressed his view on where he thinks Bitcoin is going. Let's take a listen.
>> We're in the digital gold rush and 2035 is the 99 year. That means that 99% of all the Bitcoin will have been mined in the year 2035. There's only there's if you want Bitcoin, you need to get it between now and then because the last 1% of Bitcoin comes out over a hundred years. Um yeah, there's no doubt in my mind Bitcoin will be a larger asset class than gold by the year 2035.
>> So John, you mentioned that you know institutions now are viewing Bitcoin in that kind of context as a portfolio diversifier. again thinking down the crypto stack whether it's with Avalanche or or you know kind of your competitors in there how does that change if at all or like what does that say to you in terms of how you guys approach your business your development um with that kind of push for again an institutional asset like Bitcoin at that level coming
>> that's right I mean I think each you have the everything is different underneath the hood Bitcoin as Michael saying Michael Sailor is saying it's really the digital gold or store of value you everything else whether it's a stable coin which is a medium of exchange using for payments or you know technologies that things are being built on for instance you know on Avalanche we've helped the state of Wyoming build their own basically stable coin we've helped New Jersey uh tokenize and track land and houses registry of titles on the Avalanche blockchain um those are things that are being done that are pushing the technology and the use cases forward So each one of these altcoins as you call it has to be looked at on its own for its own uh use case or its own product market fit.
>> Um so do you think of Avalanch as an altcoin? I guess that's that's the way I think about it. Anything that's not Bitcoin is an alt identified it as so I'm going with it. You know I think it's a great one. Um, but there's, you know, the reality is I think there's just too many altcoins right now and in the end it's really going to be a handful, maybe 20, 25 of these that are really useful. Avalanche probably, you know, you know, is going to be one of them. And there there's probably too many of these meme coins and things out there that actually don't serve any purpose.
>> All right. Well, work on the branding to get altcoin more distinctive from the meme coins. I think Yeah, I hear you. it's they kind of get lumped together, but um there's a difference between something that's, you know, got nothing going on and then a protocol you're actually building on. So, uh we'll pick it up next time. Uh John Woo from Avala Labs, thanks so much for the time.
>> Thank you.
>> So, let's dig more into crypto specifically. So, Bitcoin trading below 100,000 today. You can see just over 96,000 a coin. It is officially in a bare market because it has fallen 20% from its last all-time high in early October. Let's bring in Enz for here because of course she's been watching it not just over the past se several days but all this year for the past several years in ENZ do we know what is really driving this recent bout of selling?
Well, we know what's not driving a rally in in crypto right now. And that's very important because on October 10th, you had that liquidation event which spooked investors, but you've also had long-term holders, whales that have been selling at the highs and uh they like to buy at the lows and they're not stepping in. You have ETF outflows. In fact, yesterday you saw the biggest daily outflows of ETFs since their inception. So, what you're not seeing are marginal buyers. And that's one of the points that 10X Research has made that there's no with no new marginal buyers, you will continue to see this rangebound and weakness. And what they're watching for is a $93,000 level because what they're saying is that below that you're going to hit an air pocket. So unless you have catalysts uh that would send crypto higher uh there doesn't appear to be even Sean Ferrell of Funstrad who is a major bull when it comes to uh Bitcoin and crypto in general he has turned a more cautious tone over the last couple of days because what he's saying is is that okay the liquidity that we're we're expecting from the government to reopen that liquidity won't be felt for another month or two. the government shutdown was longer than what they had anti what anybody really had anticipated. So that tailwind is the timing of these tailwinds matters. And then you have the question of the Fed which is saying it's a coin flip. It's a tossup of whether the Fed is going to cut or not. And you need the Fed to cut in order to be able to support these asset prices going higher. And that's what strategists across the board are saying is that now the odds around 5050 if they cut or not that doesn't bode well for uh crypto in the near term.
>> I mean it's so I mean it's so interesting in this because there's this whole debate ongoing about whether uh you know crypto and bitcoin specifically is a risk asset right um but it feels like it's a risk asset. It feels like it's sort of correlated with what goes on with the NASDAQ. It feels like when there's a risk off, you got you talked about it yesterday, that crypto definitely bears a lot of the brunt of that 100%. And and you know, strategists talk a lot about when crypto does well, when Bitcoin does well, it also is uh constructive for equities because it tends to front run. And so uh you have strategists that have been talking on that end, but now you're looking at equities that are doing that are not doing well. So this doesn't bode well for uh crypto across the board. The other point is also when you when you're looking at fund managers that have these ETF holdings and the underlying asset is going down, they're going to get tapped and say, "Hey, you better, you know, uh trim some of those positions." So this Christmas rally that uh that investors at bulls have been expecting, it may not come through if the Fed doesn't become more doubbish pretty soon. But um Julie, I know that you spoke to Michael Sailor, the ultimate bull. Talk about bulls when it comes to uh Bitcoin. I'm curious as to your takeaways because at the time you were talking to him, you saw Bitcoin around 100,000 and even dipping below that.
>> Yeah. And it keeps it kept going lower obviously after that. And there was actually a story circulating this morning that Strategy may have cut its Bitcoin holdings. Now, Sailor was out publicly saying, "No, that's not the case. we may have moved some of our Bitcoin from one wallet into another. And he said, "As usual on Mondays is when they come out with their Bitcoin buying plans." He said, "Expect to see that we will have added Bitcoin." But what's also interesting to me is strategy with the stock falling pretty sharply this year, especially in contrast with Bitcoin and and compressing the premium that it was trading at to Bitcoin itself, that they're now offering like more of a menu, if you will. I want to play what he told me yesterday. uh what he told me and Brian Sausy yesterday about strategies strategy in this respect
>> if you want max performance you're going to take max volatility uh strategies up 75% a year on average for the last 5 years so you can actually outperform Bitcoin if you buy uh an equity that's amplified like uh MSTR if you don't want to trust anybody you want no counterparty risk you buy Bitcoin Bitcoin coins up 50% a year over 5 years. No counterparty risk.
>> So like he's kind of saying uh strategy stock is not for everyone, right? He says some people might want to buy Bitcoin itself and then they've got this new what they're calling a digital asset credit called Stretch which pays a yield of 10 and a half% and is is sort of a yielding instrument aimed at smoothing out the volatility in Bitcoin. So he's sort of taking a little bit of a a slightly more nuanced take.
>> Yeah, these are very they're more and more sophisticated products, you know, as as as they continue on the uh this this bullon bitcoin road, uh these these products that if you are a Bitcoin bull and you want to play it in different ways, uh you will you will play it in different ways. But look, I mean to your point of strategy, year-to date, the stock is down 33%. If you played Bitcoin, you'd be better off. Although, we'll have to see where Bitcoin uh ends uh this year.
>> It is very unpredictable in us. Thanks so much. Appreciate it.