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Speaker 2: Welcome to the Merin Talks Money Weekly round up, our
Speaker 2: deprie from the biggest stories in markets and economics. I'm
Speaker 2: Merrin Sumsetweb Editor at Large for Bloomberg UK Wealth and
Speaker 2: oh no, you can increase yourself John and I'm.
Speaker 3: Joined Stepics, senior reporter and authors the Money Distilled newsletter.
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Speaker 2: Yeah, we're both going to be behind the paywall, and
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Speaker 2: sign up to Bloomberg. So you can see that in
Speaker 2: the show notes. As I said earlier, now, John John, John, Johnjohn,
Speaker 2: you haven't got any cryptocurrency, have you?
Speaker 1: Nothing? Not a single token, not a penny in it. Nothing.
Speaker 3: Actually, actually, actually, I do have some obscure thing called
Speaker 3: bitcoin cash. The Mutual friend Dominic sent to me okay,
Speaker 3: services rendered at one point.
Speaker 1: Oh, we'll talk about that offline. Fascinating.
Speaker 4: Yeah, this is my.
Speaker 2: Way of leading us into the fact that we have
Speaker 2: got to talk about cryptocurrencies today. We've we flagged in
Speaker 2: this very show only last week that the re election
Speaker 2: of Donald Trump was going to be excellent news for
Speaker 2: bitcoin and for cryptocurrencies in general. Now we're speaking in
Speaker 2: the middle of the week and bitcoin search has paused,
Speaker 2: maybe for a while, maybe not for a while, but
Speaker 2: it's se a huge thirty percent jump in value as
Speaker 2: a result of Trump's rhetorical support for crypto.
Speaker 1: He's been talking about it a lot.
Speaker 2: It's currently valued at around eighty six five hundred dollars.
Speaker 2: But of course it's not the only cryptocurrency enjoying something
Speaker 2: of a boost. Doge coin, dog cooin, help me out here.
Speaker 4: I think doruge thanks doors.
Speaker 2: Doge Yeah, yeah, doge coin, which by the way, I own,
Speaker 2: has seen an eighty percent increase in the past five days,
Speaker 2: partly due to billionaire Elon musk promotion of the token.
Speaker 2: It's now considered one of the strongest performers in crypto.
Speaker 2: And I will just add that I did say I
Speaker 2: own some dogecoin, and I do, but I have recently
Speaker 2: checked my coin based account and my dogecoin is current
Speaker 2: worth ten pounds and forty two pence. It's gonna really
Speaker 2: need to move from here to drive my retirement, right.
Speaker 4: I mean, it's a coin, and that is a so
Speaker 4: that's pretty good.
Speaker 1: Yeah, no, it is.
Speaker 2: But you know, I mean, I know it's a joke coin,
Speaker 2: and I bought it as a joke, as you, mainly
Speaker 2: to irritate by my husband. But kind of the joke's
Speaker 2: on me giving it certainly work worth just over a
Speaker 2: tanner right now, one day, John, one day, my bitcoin
Speaker 2: is worth a little more my insurance bitcoin. Now we
Speaker 2: are both getting into quite a lot of trouble on
Speaker 2: Twitter in general, because every time I write anything about bitcoin,
Speaker 2: I get hoardes and hordes and hordes of replies from
Speaker 2: the crypto bros telling me how stupid I am, telling
Speaker 2: me how stupid you are, sorry, John, and how useless
Speaker 2: we are not to have educated ourselves earlier, and how
Speaker 2: one way, one day we will understand if we would
Speaker 2: only come for this subject with a little more humility
Speaker 2: and have more expert guests on. And they keep recommending
Speaker 2: experts to me, this expert, that ex I am not
Speaker 2: sure that you people really understand the difference between an
Speaker 2: expert and a siloed idea logue.
Speaker 3: You know, Yeah, there's a certain cultishness about bitcoin. And
Speaker 3: the one reason that I actually have, if I'm one
Speaker 3: hundred percent, was to have a slight soft spot for
Speaker 3: it is because this reminds me of almost exactly what
Speaker 3: the gold bugs were like in the early two thousands.
Speaker 3: And at that point, you know, when we were writing
Speaker 3: about gold, it was something that the mainstream media wouldn't
Speaker 3: touch by a ten foot bar's pole. And you know,
Speaker 3: you couldn't find an IFA or certainly not a respectable
Speaker 3: wealthy managers who would even give gold space in their portfolio,
Speaker 3: whereas today they all say, yeah, have five ten percent
Speaker 3: of your portfolio and gold that's a decent diversifier blah
Speaker 3: blah blah. So you know, there's a bit of me
Speaker 3: that so sees remembers that and sees where some of
Speaker 3: the frustration comes from.
Speaker 2: And we should actually note with that in mind, that
Speaker 2: that a deutsch Bank has just put a long term
Speaker 2: asset return to study lessons from the first quarter center
Speaker 2: of the millennium in which they point out that gold
Speaker 2: has performed better than the US secuity marketer over the
Speaker 2: first twenty five years of the of the millennium.
Speaker 3: Yeah, I mean, I mean that's really interesting, if you know,
Speaker 3: because in two thousand, if you'd said the asset to
Speaker 3: buy and hold right now is gold over.
Speaker 1: Which we did by the way, which we did.
Speaker 3: Well, Yeah, I guess good point, just saying well it
Speaker 3: did and it has over performed since then. And that's
Speaker 3: that's kind of fascinating in the all of itself. Employee
Speaker 3: speaks to, you know, balance sheets and then the funny
Speaker 3: kind of way, I guess beckcoin is actually an offshoot
Speaker 3: of that world which has been very kind to gold.
Speaker 3: It's a world where faith and the financial system, the
Speaker 3: size of government bound shoots the central bank bound cheat says,
Speaker 3: can shut up, so that the two have got there's
Speaker 3: a certain sort of relationship there, but it's never good
Speaker 3: to be cultishly invested in any asset.
Speaker 2: I'm if I'm fair to our audience, I would say
Speaker 2: maybe I've historically been a little cultures about gold, but
Speaker 2: I never regret it. Right, Let's talk. Let's talk to
Speaker 2: me a lot better than our value. Stock got to say.
Speaker 2: Let's talk a little bit about why this has happened.
Speaker 2: I mean, obviously it's a lot about the election. It's
Speaker 2: not about Donald Trump, about the the likelihood of a
Speaker 2: crypto friendly government across the board. We're like to see
Speaker 2: some new cryptocurrency friendly legislation. There's almost nothing here that
Speaker 2: appears to be negative to the cryptocurrency market. It's total capitalization.
Speaker 2: Market capitalization is hid in all time high. We've seen
Speaker 2: extraordinary levels of activity. Another a stat from Deutsche Bank
Speaker 2: here twenty for our trading volume exceeding four hundred dollars.
Speaker 2: So you've got a lot going on here.
Speaker 4: Than silver though in terms of market yes, I saw that.
Speaker 1: I saw that, Mart Okay, So there's lots of things
Speaker 1: that could happen here.
Speaker 2: We'll have more regularly claratory we'll have more institutional participation,
Speaker 2: presumably as a result of this regulatory clarity, so we
Speaker 2: can expect even more money to pour into bitcoin. ETFs
Speaker 2: will have a better infrastructure, and maybe we'll see a
Speaker 2: broader adoption of cryptocurrencies among not just the institutional but
Speaker 2: also the retail market.
Speaker 1: So there's that.
Speaker 2: We've also got and momentum behind it. We've got possibly
Speaker 2: lower interest rates coming, and that's good for everything. Everything
Speaker 2: growthy and bitcoin tends to move alongside growth. And then
Speaker 2: the final thing, which you mentioned briefly earlier, is ded dollarization,
Speaker 2: fast raising debt, general global tensions. If you think of
Speaker 2: crypto a bit like you think of gold, then it's
Speaker 2: going to be in there. And here's another fascinating stat
Speaker 2: for you again, I'm pulling this out of Deutsche Bank.
Speaker 2: I think it's really interesting. The bricks nations now conduct
Speaker 2: twenty eight percent of cross border crypto currency transactions. So
Speaker 2: that suggests that it really is important that cryptocurrencies are
Speaker 2: facilitating global economic flows, international emissionss, etcetera. In a way
Speaker 2: that we hadn't We have talked about it on this podcast,
Speaker 2: by the way. We had lengthy conversations, did we which
Speaker 2: guess it was we had on who talked to us
Speaker 2: her a lot about the way that cryptocurrency is, and
Speaker 2: bitcoin in particular a use for economic transfers res across
Speaker 2: the third world.
Speaker 3: Was that limb Yeah, the one that keeping that we
Speaker 3: should have oin and who we have had Oin?
Speaker 2: Yes, the person people keep telling us we should definitely
Speaker 2: have Lynen and I keep saying no, but we had
Speaker 2: Lenon and leaves them going, well, then why don't you
Speaker 2: understand that she was really good, very very good.
Speaker 1: Yeah, very good.
Speaker 2: Anyway, So all these things, So, John, does this lead
Speaker 2: you rushing out now to buy bitcoin and accepting that
Speaker 2: you and I and Be in particular have been completely
Speaker 2: wrong on bitcoin ever since that tweet that I wrote
Speaker 2: that thank you tech bros For dragging up back in
Speaker 2: twenty eleven where I said that bitcoin at twenty eight
Speaker 2: dollars was a mania.
Speaker 4: I mean it was a mania at the time.
Speaker 3: It's been through a number of manias, and Bitcoin's been
Speaker 3: through at least two major bubbles and busts now, and
Speaker 3: it's sort right that Matthew and bitcoin hasn't changed. I
Speaker 3: think it's a real thing. I think it has a
Speaker 3: use case. I just don't know how to value it,
Speaker 3: and I think the valuation is largely driven by flows,
Speaker 3: which is, you know, very indicative of the era that
Speaker 3: we're in. Pretty much every asset valuation is driven more
Speaker 3: so flows have become much more important than fundamentals, and
Speaker 3: I don't know when or if that's going to change,
Speaker 3: you know, I wish I had the wind that when
Speaker 3: I frustrated by it in like twenty fifteen, in.
Speaker 1: My stupid We've both been there.
Speaker 3: So you know I would I would probably at least
Speaker 3: have sold it at some point and bought a small
Speaker 3: car with it, you know, but I like to think
Speaker 3: that I could be a millionaire.
Speaker 2: Bitt this point that that is the important thing to remember. Everyone,
Speaker 2: the likes of you and me, John say, well, I
Speaker 2: wish we bought this point. I wihould put at this point,
Speaker 2: I we should bought at this point, we forget.
Speaker 1: That we would have sold it.
Speaker 2: Yeah, we would not still be holding it now and
Speaker 2: we'd be living with that kind of seller's regret, and
Speaker 2: we would then almost definitely buy in at the top
Speaker 2: of everything.
Speaker 3: All we pull an Isaac Newton for absolutely certain the
Speaker 3: sea bubble thing.
Speaker 2: We would that would not be shameful, you like her.
Speaker 4: I compared this to Isaac Newton.
Speaker 1: I did. I really, I really appreciated that. Thank you.
Speaker 2: Now listen, there's something that I that I wanted to
Speaker 2: talk about, which is the possibility. And I'm not saying
Speaker 2: this because I don't have very much bitcoin. There is
Speaker 2: a possibility that is beginning to be discussed that Trump's
Speaker 2: regulatory regime may be very crypto positive, but not necessarily
Speaker 2: bitcoin bitcoin positive. And I've been talking to Russell Russell Napier,
Speaker 2: the financial historian and founder of the Library of Mistakes,
Speaker 2: who we've had on the podcast before, and we talked
Speaker 2: to and about a reasonable amount about this. He makes
Speaker 2: a very good point. He says, look, bitcoin is a
Speaker 2: portal that allows savers to avoid measures that push savings
Speaker 2: towards funding national investments. Trump is a nationalist. He's going
Speaker 2: to want to use national savings for what he perceives
Speaker 2: to be the national good. So maybe that's going to
Speaker 2: make him move away from bitcoin slightly towards other, well
Speaker 2: not other, but actual stable coins.
Speaker 1: Now they're the opposite.
Speaker 2: They're back to usually by short term treasury securities, and
Speaker 2: they attract funds into the dollars, into the US government,
Speaker 2: so they may turn into not just a means of
Speaker 2: transaction for Americans, but also a store of value for
Speaker 2: foreigners who don't have easy access to dollar deposits, So
Speaker 2: that not only brings funds into the dollar, but also
Speaker 2: provides funds that Trump may be able to direct to
Speaker 2: what he considers to be the national good. So there's
Speaker 2: there is a difference here between bitcoin and stable coins.
Speaker 2: So when we talk about crypto, we have to remember
Speaker 2: that crypto isn't one great big mass. It may be
Speaker 2: that we now move into an era where all the
Speaker 2: things that we have that people have discussed with us
Speaker 2: on the podcast about the things that are good about
Speaker 2: crypto in general, changing changing the way companies run, changing
Speaker 2: the way various legal processes run, changing the way the
Speaker 2: infrastructure of finance is run. That may turn out to
Speaker 2: be the key thing under Trump as opposed to bitcoin itself.
Speaker 3: I suppose that's the interesting thing. And this, I mean,
Speaker 3: this is one reason you know, obviously the cryptos of
Speaker 3: the thing, because stable currencies are stable coins are the
Speaker 3: thing that actually worry governments, and they're the reason that
Speaker 3: we're getting central bank digital currencies cbdc's because the fundamentally
Speaker 3: the government cannot have the private sector taken over or
Speaker 3: taking a large chunk of the currency business. That's basically
Speaker 3: you know that and you've pointed this out before. Governments
Speaker 3: have always made sure that the monopoly, in fact those
Speaker 3: with monarchs as well, the monopoly and currency issuance must
Speaker 3: always be with the leaders of the country, basically, and
Speaker 3: crypto has posed a threat to that, and that's why
Speaker 3: central banks and the bis have taken it seriously. And
Speaker 3: you're right, and I think the risk here is that
Speaker 3: the sort of ideological underpinnings of bitcoin and crypto specifically
Speaker 3: we're all about essentially escaping from government control of currencies,
Speaker 3: and the irony of ironies, as always says, is that,
Speaker 3: as you say, maybe Trump is the one to mainstream them,
Speaker 3: and maybe mainstreams them by making you know, bitcoin a
Speaker 3: reserve aset that backs the staple coin version of the dollar.
Speaker 4: Type of thing.
Speaker 3: You know, he sort of brings it into, you know,
Speaker 3: under the control of you know, a kind of essentialized
Speaker 3: kind of power. And I realize a lot of people
Speaker 3: will be spitting out their tea when they hear that,
Speaker 3: But that's kind of you know, if you're excited the
Speaker 3: black Rock have launched that, you know, an etf owning bitcoin,
Speaker 3: et cetera.
Speaker 2: And then then you're not really yes, I mean, you're
Speaker 2: not there with the original purpose of bitcoin. You know,
Speaker 2: it's supposed to be more on a transaction currency that
Speaker 2: has not happened, and it's long been taken over by
Speaker 2: other things, and that they're supposed to be a store
Speaker 2: of value, and you can't really call it that because
Speaker 2: of the volatility. I mean, you can say it's gone
Speaker 2: up in value, but that's not the same as being
Speaker 2: a store of value, is it. And of course there's
Speaker 2: this idea that it was supposed to operate outside the system,
Speaker 2: and I was, it's now being pulled deeper and deeper
Speaker 2: into the system. And one thing I might add to that,
Speaker 2: by the way, is it in the general abuse I
Speaker 2: get on Twitter as next tech bros. The general abuse
Speaker 2: I get on Twitter a lot. A lot of it
Speaker 2: is about, well, you know, if Larry Fink thinks it's
Speaker 2: an asset class, then you should think it's a NAS
Speaker 2: class too, and do you know what's wrong with you?
Speaker 1: Et cetera.
Speaker 2: And the point I would say to that is that
Speaker 2: just because big institutions launch vehicles that allow you to
Speaker 2: invest in a product, does not mean that they have
Speaker 2: a particular belief in the long term value of that
Speaker 2: product of that acid class. Simply that all products in
Speaker 2: which you invest make big institutions money. So you know, obviously,
Speaker 2: if you're going to set up a Bitcoin ETF, you
Speaker 2: assume the bitcoin has got strong some longevity. But it's
Speaker 2: not a vote of confidence in its long term value.
Speaker 2: It's a vote of confidence in the fees that you
Speaker 2: can gather from creating a vehicle in which other people
Speaker 2: can invest in. I mean, it's different, it's different, So
Speaker 2: please everyone stops sending me tweets saying that it was
Speaker 2: good enough for black crockets should be good enough for me.
Speaker 3: They only I mean, from a practical point of view,
Speaker 3: I think that the best approach to investing in bitcoin
Speaker 3: that I have seen is probably Charlie Morris's Bold, and.
Speaker 2: I think we can probably say to that before you
Speaker 2: tell us what boulders, I think I will also say
Speaker 2: everyone telling us on Twitter to get Charlie Morrison, he's.
Speaker 1: Been on john't remind us what bold is.
Speaker 3: Basically, Charlie's get this mix where it's it's something like
Speaker 3: it's the proportions vary, but it's a big chunk of gold.
Speaker 4: With a little chunk of bitcoin.
Speaker 3: And the great thing about it is that because they
Speaker 3: kind of have similarities, but they also have differenceies, so
Speaker 3: when one's going up, the others going down in vice versa.
Speaker 3: But also it smooth at the volatility, and I think
Speaker 3: it's returned. I could be completely wrong in this because
Speaker 3: I don't have the figure in front of me, but
Speaker 3: I think it's about eighty percent this year, which is
Speaker 3: much better than you know, it's it's not as good
Speaker 3: as holding bitcoin by itself, but at the same time,
Speaker 3: there's no point at which you've been looking at your
Speaker 3: portfolio going oh my god and kind of like sobbing
Speaker 3: and worrying that you can be able to pay your
Speaker 3: mortgage that.
Speaker 4: Week or whatever.
Speaker 3: So you know that's that's eighty percent is quite respectable.
Speaker 3: And Charlie's been banging the drum on this for years now,
Speaker 3: and think he's pretty much the only person I can
Speaker 3: think of certainly that's talked about it in that respect.
Speaker 3: And he definitely understands bitcoin for anyone who is, you know,
Speaker 3: that way inclined.
Speaker 4: So no, I think his approach is the best.
Speaker 1: Do you mean he doesn't need to educate himself.
Speaker 3: He doesn't need to educate himself, and obviously with more humility. Yeah,
Speaker 3: humility is the first world that springs to mind when
Speaker 3: I think you.
Speaker 1: Okay, but that's interesting.
Speaker 2: So anyone who hasn't listened to the episode that we
Speaker 2: did with Charlie, do go back and listen to listen
Speaker 2: to it again.
Speaker 1: It's very interesting.
Speaker 3: Some of us very kindly, just as showed me Childie's
Speaker 3: most recent update. And so Bold has with on fifty
Speaker 3: six percent, which is better than gold and not as
Speaker 3: good as bitcoin.
Speaker 2: Yeah.
Speaker 1: God, I take that, though, wouldn't you.
Speaker 4: I would take fifty six percent.
Speaker 1: Crypto has done very well. Gold has done very well.
Speaker 1: Crypto has done better.
Speaker 2: You could have done pretty well by having both. You
Speaker 2: may think that the future is very certain for bitcoin,
Speaker 2: given that Trump appears to be a backer of bitcoin,
Speaker 2: but there are all sorts of dynamics out there that
Speaker 2: you don't and we don't yet fully understand. The future
Speaker 2: is never certain anything else about John.
Speaker 3: No said obviously all complaints to somewhere.
Speaker 2: They also went to oh absolutely, and particularly about bitcoin,
Speaker 2: particularly about bitcoin. And by the way, one one last thing,
Speaker 2: it might still be a mania might be who knows.
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