Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Well, with more on the year that was and what
Speaker 2: may lay ahead, particularly in crypto. Now we're joined by
Speaker 2: Bill Barheit, CEO and founder of Abra, a global platform
Speaker 2: for digital asset, prime services and wealth management for high
Speaker 2: net worth individuals and institutions. So if you're Abra, Bill,
Speaker 2: I'm tempted to ask, when is the Cadabra coming in?
Speaker 2: Is it next year?
Speaker 1: Good question, Good to see you, Thanks for having me. Look,
Speaker 1: there's a lot of things that, as they say, history
Speaker 1: doesn't necessarily repeat itself, put it off in rhymes. There's
Speaker 1: a lot of things going on that feel like twenty
Speaker 1: twenty to me, we had a market crash at the beginning,
Speaker 1: COVID induced here, we had you just brought up a
Speaker 1: crash in October which was induced by the initially one
Speaker 1: hundred percent tiret announcement on China, but also some serious
Speaker 1: issues that were uncovered afterwards in a one of the
Speaker 1: large exchanges internationally. And then you know, gold rallied right,
Speaker 1: and in twenty twenty, gold rallied from I think it
Speaker 1: was fourteen hundred to two thousand. Silver rallied from about
Speaker 1: twelve to almost thirty. Bitcoin stayed in a range at
Speaker 1: that point, and it's trading very close to where it
Speaker 1: started the year right now. So you know, a lot
Speaker 1: of this sounds familiar. But by the way, after gold peaked,
Speaker 1: we had a rotation into risk assets in twenty twenty,
Speaker 1: and bitcoin went on an epic run from twelve thousand
Speaker 1: to over sixty thousand, right, and the market cap of
Speaker 1: the entire crypto space went up by eight x by
Speaker 1: mid twenty twenty one. So now gold is near record
Speaker 1: highs around forty five hundred, Silver's around eighty dollars. Bitcoin
Speaker 1: has basically been sideways this year. I actually think it
Speaker 1: went up significantly after the election because it was front
Speaker 1: running the idea that all of the regulatory obstacles to
Speaker 1: adoption we're going to be removed, which has proven mostly
Speaker 1: true with additional legislation pending. Right we talked about October
Speaker 1: liquidation events, So it feels like with the FED and
Speaker 1: other liquidity catalysts, twenty twenty is going to repeat itself
Speaker 1: in twenty twenty six. Rate cuts, you know, leverage reserves
Speaker 1: and the banks are likely to get really relaxed, which
Speaker 1: means more leverage again. Regulatory to clarity, ETFs, et cetera,
Speaker 1: et cetera.
Speaker 3: Hey, Bill, one thing I do wonder. I mean, you
Speaker 3: guys are a platform. You see things. You see investors,
Speaker 3: what they are doing, high net worth individuals, also institutions
Speaker 3: talk to us about activity, more money coming in, more
Speaker 3: money going out. Give us some color on what you
Speaker 3: are seeing on your platform.
Speaker 1: Sure, so I think we're seeing a rotation. There's two
Speaker 1: types of rotation we're seeing. The first is there was
Speaker 1: a well known investor who referred to this as Bitcoin's
Speaker 1: IPO moment. And what I think he meant by that
Speaker 1: is we had people who've invested in bitcoin ten twelve
Speaker 1: years ago who were taking a little bit of profits,
Speaker 1: let's say fifteen to twenty percent of profits. That's a
Speaker 1: lot of money because those people have massive concentrations. Their
Speaker 1: entire wealth, if you've been holding for ten years, is
Speaker 1: probably based on bitcoin. And so that IPO moment represented
Speaker 1: a bit of a rotation. Now we're actually seeing a
Speaker 1: rotation where a significant percentage of bitcoin is no longer
Speaker 1: being held on exchanges. So we're not in exchange. We're
Speaker 1: a wealth managing platform just like another ria. So money
Speaker 1: coming into a platform like ours tends to stay there
Speaker 1: for a very long time, stays in cold storage for
Speaker 1: a very long time. Now we're seeing a lot of
Speaker 1: clients asking to be able to borrow against those Bitcoin
Speaker 1: holdings because they think that it's reached a long term
Speaker 1: floor with significant outside.
Speaker 2: Well to your customers not getting a little scared though,
Speaker 2: because I mean, it is extraordinarily volatile at the best
Speaker 2: of times. But just in the last three months, as
Speaker 2: we could see, we're down, you know, twenty five percent.
Speaker 2: Sure we're higher than we were, you know before the
Speaker 2: President took off us.
Speaker 1: But still yeah, no, that's that's not a that's not
Speaker 1: that's a trading phenomenon. Right, So in our world, first
Speaker 1: of all, in video at points this year, was and
Speaker 1: Tesla rule were significantly more volatile than bitcoin. I would
Speaker 1: also posit that, right, it's it's traders that drive that price.
Speaker 1: The incremental float that's available for trading, and bitcoin is
Speaker 1: not nearly as big as it used to be because
Speaker 1: so much of it is locked up now, whether it's
Speaker 1: ETFs or or in platforms like ours. Our our clients
Speaker 1: are long term holders, they don't sell, and the rotation
Speaker 1: of money out of our platform is nearly zero. And
Speaker 1: that's not just the function of the fact that they
Speaker 1: like our service, which I'm sure they do. It's that,
Speaker 1: you know, our clients are just not interested in selling bitcoin.
Speaker 1: The biggest question I get is what would I possibly
Speaker 1: sell into? It's it's the best long term you know,
Speaker 1: capital gains, potential asset that I own, right, and they're
Speaker 1: not speculators.
Speaker 3: By and large. What's important that you see from the
Speaker 3: administration that continues the support of bitcoin and other cryptocurrencies.
Speaker 3: We certainly know we have a White House safe to
Speaker 3: say that is very favorable to the crypto environment. The
Speaker 3: President's family is certainly involved in it. But what is
Speaker 3: it that you expect in terms of the environment. They're
Speaker 3: still trying to figure out regulatory there's still a long
Speaker 3: ways to go. Does that get solved in twenty twenty six,
Speaker 3: especially when you've got midterm you know, midterms looming and
Speaker 3: maybe Congress coming back to kind of assert itself.
Speaker 1: Good question. I see three things happening. The first is
Speaker 1: we're going to get a second bill passed. In my opinion,
Speaker 1: we got the stable coin legislation, the Genius Act passed,
Speaker 1: which I think was pretty reasonable. We're about to get
Speaker 1: the Clarity Act out of committee, I believe, which is
Speaker 1: going to be the biggest overhaul in many ways to
Speaker 1: securities and commodities regulation in decades, which is going to
Speaker 1: make it easy for the second part of of my thesis,
Speaker 1: which is the tokenization of everything. So you're going to
Speaker 1: see markets globally, including the US, are to adopt tokenized
Speaker 1: versions of equities, commodities, real estate, et cetera, et cetera.
Speaker 1: And then the third I think you're going to see
Speaker 1: more of the same as it relates to global and
Speaker 1: specifically US debt markets.
Speaker 2: Right where I have a problem with this build because
Speaker 2: I wonder why replicate and why would you buy the
Speaker 2: replica when you can buy the real thing.
Speaker 1: I wouldn't buy a replica, So that's a good question.
Speaker 1: There's a nuance there. So the early days of tokenization
Speaker 1: are going to be tokenizing existing shares, which adds a
Speaker 1: little bit of value, which I'll explain in a second,
Speaker 1: But the real value comes in native tokenized equity issuance,
Speaker 1: and that has huge advantages. The first is stocks are
Speaker 1: stock markets are closed more than they're open. Okay, Crypto
Speaker 1: markets don't close. So now all of a sudden you
Speaker 1: have the opportunity to have a twenty four to seven
Speaker 1: borderless market. Right, that is twenty four to seven, which
Speaker 1: is what investors in twenty twenty five, twenty twenty six
Speaker 1: wants in my opinion, right, that's number one, number two.
Speaker 3: As I mentioned, Bill just got about thirty seconds, So
Speaker 3: I just want to give you an opportunity to wrap up.
Speaker 1: Go ahead, yeah, sure. And then the second part leads
Speaker 1: to what I said before, What is the fastest scoring
Speaker 1: service we see? It's people borrowing against the bitcoin. If
Speaker 1: you've tokenized Apple shares, Tesla shares, it's now just as
Speaker 1: easy to borrow against the value of those shares without
Speaker 1: having to pay capital gains taxes as it is against bitcoin.
Speaker 1: That is going to drive the tokenization of everything.
Speaker 3: We will continue this no doubt. In twenty twenty six,
Speaker 3: Bill Barhyde, he's founder and CEO of Auber, joining us