WEBVTT - How to Trade an Unusually Boring Bitcoin

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<v Speaker 1>This is Bloomberg Crypto, a daily Bloomberg I heard podcast.

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<v Speaker 1>M Valdana Hirak, a market supporter at Bloomberg, filling in

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<v Speaker 1>for Stacy Marie Ishmael. It's Wednesday, November two, m h.

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<v Speaker 1>We all know crypto is notorious for its volatility and

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<v Speaker 1>all the wild swings that we see in prices have

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<v Speaker 1>been a trademark of the market for years, and it's

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<v Speaker 1>also something that's been shaping the trading behaviors of investors

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<v Speaker 1>who are sometimes looking to make a very quick profit.

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<v Speaker 1>So what happens when the market's largest digital asset, Bitcoin

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<v Speaker 1>starts losing its volatility. Over the last four months, the

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<v Speaker 1>coin has been trading in a very tight range of

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<v Speaker 1>around twenty dollars a coin, and it's been unable to

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<v Speaker 1>break out in any real way. So how have crypto

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<v Speaker 1>investors who are used to those ups and downs been

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<v Speaker 1>spawning and how have their investing strategies shifted. For more

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<v Speaker 1>on how traders are dealing with Bitcoin's stagnation, we're joined

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<v Speaker 1>by Katie Greifeld, markets reporter at Bloomberg. Have you been

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<v Speaker 1>in this space for a long time? You're sitting on

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<v Speaker 1>still just magnitudes of gains. Katie, thanks so much for

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<v Speaker 1>joining us, Thanks for having me. I hope we have

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<v Speaker 1>a really good time. I'm a little bit nervous. I

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<v Speaker 1>feel like the bar is high. It's extremely high. Filling

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<v Speaker 1>in for Stacy Marie, Jeez, high for me, high for you.

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<v Speaker 1>I was gonna say that's a you problem. Stakes are

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<v Speaker 1>high for you because you need to do a good job.

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<v Speaker 1>Can I ask you a question here too? Okay, I'm

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<v Speaker 1>going So we've been talking about how bitquin has been

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<v Speaker 1>hovering around the twenty thousand all arranged for a couple

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<v Speaker 1>of months now, and my first question for you is

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<v Speaker 1>is bitquin boring? I feel like it's super boring when

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<v Speaker 1>you look at almost every other asset class that exists.

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<v Speaker 1>You have stocks, of course, you have treasury bonds which

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<v Speaker 1>have just gone insane, and then don't even get me

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<v Speaker 1>started on the currency market. When you look at the

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<v Speaker 1>don't want to get the Great British Pound, it's just

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<v Speaker 1>been totally erratic. So I feel like when you compare

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<v Speaker 1>bitcoin to its own history, and when you compare it

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<v Speaker 1>to the rest of the investment landscape, it's super boring.

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<v Speaker 1>Because people are used to huge swings in crypto prices, right,

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<v Speaker 1>that's kind of what it's known for. I feel like,

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<v Speaker 1>so now that we have prices sort of just like

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<v Speaker 1>meandering around nineteen on a very good day. Around twenty thousand,

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<v Speaker 1>volatility has also gone down. Can you talk about that

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<v Speaker 1>and what that means? So I think this is probably

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<v Speaker 1>a long term problem for crypto when you think about

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<v Speaker 1>what attracted a lot of traitors to the cryptocurrency sphere

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<v Speaker 1>over the past two years, particularly during the pandemic. It's

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<v Speaker 1>supposed to be exciting, it's supposed to be fun. Now

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<v Speaker 1>you're just stuck in this range. It feels like a

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<v Speaker 1>lot of narrow tis have sort of fallen apart, which

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<v Speaker 1>I know we'll get to. So I feel like cryptos

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<v Speaker 1>having a bit of an identity crisis. But I think

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<v Speaker 1>part of the reason why you're seeing Bitcoin just sort

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<v Speaker 1>of trade sideways and going a straight line sideways versus

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<v Speaker 1>what we're seeing in almost every other asset class feels

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<v Speaker 1>like the marginal seller is gone. They've already been flushed out.

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<v Speaker 1>All you're left with is the hardcore believers who might

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<v Speaker 1>be depressed, but I don't think they're going to sell.

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<v Speaker 1>You're hitting on a million topics. I want to touch

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<v Speaker 1>on with you, one of them being the narratives, but

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<v Speaker 1>maybe just talk a little bit more about why it

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<v Speaker 1>is the prices haven't really been able to break out

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<v Speaker 1>because I know, a couple of months ago, for example,

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<v Speaker 1>we had a really big announcement between black Rock and

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<v Speaker 1>the crypto platform coin Based. Black Rock chose to partner

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<v Speaker 1>with coin base because of its scale in the market.

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<v Speaker 1>This news coming out with coin Based and with black

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<v Speaker 1>Rock showing that the institutional demand to be able to

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<v Speaker 1>trade go through some of the more traditional huge players

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<v Speaker 1>in the market is not slowed down. And in fact,

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<v Speaker 1>as the saying goes that this is the time to build,

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<v Speaker 1>people are obviously building now. And I think Bitcoin rally

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<v Speaker 1>like one or two percent that day. Nothing It's nothing

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<v Speaker 1>for bitcoin, it's nothing. So you would have thought maybe

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<v Speaker 1>that the reaction would have been just much larger. You

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<v Speaker 1>mentioned the stock market where we've been going through periods

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<v Speaker 1>of seeing stocks rallying and bitcoins still stuck. Why is

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<v Speaker 1>it that there's not been a catalyst really to help

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<v Speaker 1>it break out. Let's talk about the ceiling and the

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<v Speaker 1>floor on that range. I think I'll start with the floor,

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<v Speaker 1>which goes back to the point I made that the

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<v Speaker 1>marginal seller is gone. I mean I tracked the world

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<v Speaker 1>of e t f s and exchange traded fund like

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<v Speaker 1>products pretty closely. Bloomberg Intelligence has some great data, which

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<v Speaker 1>is if you look at previous quarters, there was a

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<v Speaker 1>lot of selling from global crypto tracking funds, and then

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<v Speaker 1>if you look at the most recent quarter, you really

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<v Speaker 1>didn't see that many outflows because again that seller had

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<v Speaker 1>already left. We've already seen this enormous depressing draw down

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<v Speaker 1>which has far outpaced the declines that we've seen in

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<v Speaker 1>the stock market. So I feel like that is acting

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<v Speaker 1>as a bit of a support on the downside while

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<v Speaker 1>you're not seeing a breakout there. And then on the upside,

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<v Speaker 1>even with those incremental pieces of good news, the big

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<v Speaker 1>backdrop hasn't changed, and that is the feed is actively

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<v Speaker 1>raising rates, tightening monetary policy, taking liquidity out of the system.

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<v Speaker 1>And it feels like that is really the huge factor here.

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<v Speaker 1>That just isn't an environment where sort of speculative asset

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<v Speaker 1>classes are going to do that well, and that I

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<v Speaker 1>think is what's been extinguishing every rally that maybe looks

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<v Speaker 1>like it's going to get off the ground. I love

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<v Speaker 1>this point about the Fed. I love talking about thank you,

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<v Speaker 1>because I remember a couple of years ago, during the pandemic,

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<v Speaker 1>you and I used to write stories about the very

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<v Speaker 1>very popular money printer go Burr meme. Oh yeah, maybe

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<v Speaker 1>you can tell our listeners what that was and how

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<v Speaker 1>it's relevant today. That was just the idea of quantitative easing,

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<v Speaker 1>just the FED buying a ton of bonds, every single

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<v Speaker 1>bond it could get its hand on, during again, the

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<v Speaker 1>grips of the pandemic, when it was just trying to

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<v Speaker 1>keep the entire system functioning. So that was Jerome Pal

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<v Speaker 1>sort of cranking the worrying money printer. I'm describing it badly,

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<v Speaker 1>just great, but that was the idea of printing money.

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<v Speaker 1>That they're just making money out of thin air. That's

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<v Speaker 1>going to devalue Fiat currencies. That hasn't happened. The dollar

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<v Speaker 1>is really strong right now. But if you think about

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<v Speaker 1>the inverse of that meme, money printer, I don't know

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<v Speaker 1>dies that's what's happening now. It's basically they're sucking the

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<v Speaker 1>money out of the system. All that money that was

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<v Speaker 1>created is coming out. The FED is actively whittling down

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<v Speaker 1>its balance sheet slow really, but it's happening, and just

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<v Speaker 1>the signal that this is what the FED intends to do.

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<v Speaker 1>It intends to shrink its balance sheet. That's really weighing

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<v Speaker 1>on every stripe of risk asset right now, which bitcoin,

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<v Speaker 1>crypto in general definitely falls into that camp, maybe the

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<v Speaker 1>ultimate one even yeah, the purest measure of risk, appetite

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<v Speaker 1>of sentiment too. Glitch was a reference to one of

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<v Speaker 1>the new Taylor Swift songs. I actually didn't even catch that.

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<v Speaker 1>Which one glitch it's called? Well, that would be easy.

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<v Speaker 1>But remember you and I wrote a great story I

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<v Speaker 1>think in anticipation of the FEDS liftoff hike back in March,

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<v Speaker 1>that this will be the true test of whether or

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<v Speaker 1>not crypto was a bubble, because if you think about

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<v Speaker 1>the FEDS last rate hiking campaign it was it ended

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<v Speaker 1>in and if you think about where bitcoin and the

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<v Speaker 1>crypto sphere was at that point, it was a much

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<v Speaker 1>less large system. There just wasn't as much money involved.

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<v Speaker 1>I mean, I think bitcoin was under five grand a coin,

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<v Speaker 1>so the state were much higher this time around. And

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<v Speaker 1>I mean it's still early days, I guess, but it

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<v Speaker 1>seems that so far the bubble has been popped. But

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<v Speaker 1>how smart were we to write that story. You know,

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<v Speaker 1>we were so on the ball, we were so ahead

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<v Speaker 1>of our time. Yeah. I hope our bosses are listening. Yeah,

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<v Speaker 1>Stacy Marie, I hope you're listening. So you mentioned the

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<v Speaker 1>different narratives, and we've talked on this podcast before about,

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<v Speaker 1>you know, some of the narratives that have existed around

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<v Speaker 1>bitcoin in particular, where you know, people used to say

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<v Speaker 1>that it's an inflation hedge or that it's a store

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<v Speaker 1>of value, and the narratives really have been shifting over

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<v Speaker 1>the last couple of years, especially this year as prices

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<v Speaker 1>have been crashing. So what when you talk to people,

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<v Speaker 1>what do they tell you the narratives are, or what

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<v Speaker 1>even when you're on Twitter when people are talking about crypto,

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<v Speaker 1>what narratives are they associating with the space? They tell

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<v Speaker 1>me to zoom out. Honestly, because I've asked a few

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<v Speaker 1>different people in a few different formats, can we put

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<v Speaker 1>the inflation hedge meme narrative to bed? It feels like

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<v Speaker 1>it absolutely hasn't worked. We're dealing in the US with

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<v Speaker 1>the hottest inflation in forty years. Bitcoin is what down

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<v Speaker 1>over fifty sixty percent year to date, and I mean,

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<v Speaker 1>the answer is still that I get is zoom out.

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<v Speaker 1>It hasn't been around for long enough. In the grand

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<v Speaker 1>fullness of time, this will work. So I feel like

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<v Speaker 1>that narrative Most would tell you, Okay, it's we've debunked

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<v Speaker 1>that one, but there's we put it to bed, but

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<v Speaker 1>some are still hanging onto it. The store of value

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<v Speaker 1>is something I still hear that. You know, this is

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<v Speaker 1>still the place where you want to put your money

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<v Speaker 1>if you're worried about government's basically inflating way the value

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<v Speaker 1>of their currencies. Obviously, that narrative has been a bit

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<v Speaker 1>more challenged recently. The narrative that I feel like has

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<v Speaker 1>fallen away is bitcoin as a means of payment. I

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<v Speaker 1>don't see a lot of people making the case that

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<v Speaker 1>this should be a currency you use day to day

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<v Speaker 1>to pay for coffee exactly, Taylor Swift album exactly. I'm

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<v Speaker 1>not gonna, you know, buy a piece of pizza or

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<v Speaker 1>concert tickets to the next Taylor Swift show with my bitcoin?

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<v Speaker 1>So can I come with you? Sure? We'll be paying

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<v Speaker 1>with you know, the good old greenback. Probably in terms

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<v Speaker 1>of what the next narrative will be though, that really

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<v Speaker 1>drives the space forward for better or for worse. I'm

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<v Speaker 1>not sure what that will be. I haven't heard a

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<v Speaker 1>clear consensus around what's next. I love the one on

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<v Speaker 1>Twitter that's one btc equals one btc. Have you've seen that?

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<v Speaker 1>What does that mean? Tell me what that means? Who

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<v Speaker 1>it means? One bitcoin is always going to be worth

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<v Speaker 1>one bitcoin? Okay? Cool? Does that make me want to

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<v Speaker 1>buy it? It should? Yeah, this is what people on

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<v Speaker 1>Twitter are hoping. Yeah. Yeah, I guess I'm not necessarily

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<v Speaker 1>the target audience for that one. Yeah I am. Yeah.

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<v Speaker 1>I feel like you hear that a little bit around

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<v Speaker 1>or more than a little bit around stable coins. Oh really,

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<v Speaker 1>I don't know what do people say about tablecoins? One

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<v Speaker 1>stable quote? Yeah, of course there's one stable Yeah, but

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<v Speaker 1>I think the one bitcoin equals one bitcoin is just

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<v Speaker 1>the idea that it's crashed, but there's hope. Well we'll

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<v Speaker 1>see if it gets down to one dollar and then

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<v Speaker 1>one bitcoin will be Oh my gosh, that's dark. You're

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<v Speaker 1>gonna get hat on Twitter for that. I didn't say it.

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<v Speaker 1>Don't at me. Please up next more with Bloomberg reporter

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<v Speaker 1>Katie Greifeld on how investors and traders are adapting to

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<v Speaker 1>Bitcoin's lack of volatility. Okay, so we're talking about how

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<v Speaker 1>bitcoin has been hovering around twenty volatility has come down,

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<v Speaker 1>the space has become a little bit more boring. You

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<v Speaker 1>and I also, over the last couple of years, have

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<v Speaker 1>been writing quite a bit about how there's so many

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<v Speaker 1>opportunities within the crypto space if you're a trader to

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<v Speaker 1>take advantage and potentially make a quick book, or to

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<v Speaker 1>sort of take advantage of some arbitrage or some discrepancy

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<v Speaker 1>within the market. So things are a little bit more boring. Now,

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<v Speaker 1>what are people doing? This is a great question because

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<v Speaker 1>it brings me back to the days where I covered

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<v Speaker 1>actual currencies for Bloomberg News. I started at Bloomberg as

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<v Speaker 1>a traditional currencies reporter, covering the dollar, the euro, the yen,

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<v Speaker 1>the pound, and back when I was doing it, it

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<v Speaker 1>wasn't fun. Nothing was happening. There was absolutely no volatility

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<v Speaker 1>in the space at all. I'm talking about. Like, so,

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<v Speaker 1>I wrote a lot of these stories about, Okay, you're

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<v Speaker 1>a currency trader, how do you make money? You run

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<v Speaker 1>a heade fund, you have to make money. What are

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<v Speaker 1>you doing? So it's kind of a similar idea here,

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<v Speaker 1>And you had a great story on this. Actually, part

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<v Speaker 1>of the way that people are making money is that

0:13:01.080 --> 0:13:04.959
<v Speaker 1>they're selling options on crypto. This is a way to

0:13:05.040 --> 0:13:09.040
<v Speaker 1>make money in a sideways market, not necessarily taking a

0:13:09.120 --> 0:13:12.720
<v Speaker 1>directional bet. And that you know, rhymes with some of

0:13:12.720 --> 0:13:15.640
<v Speaker 1>the stuff that you saw in traditional currencies back in

0:13:15.880 --> 0:13:18.719
<v Speaker 1>the dark days of no volatility. I thought this was

0:13:18.800 --> 0:13:22.880
<v Speaker 1>interesting too. There are some people going long. You spoke

0:13:22.920 --> 0:13:26.520
<v Speaker 1>to a portfolio manager at Ledger Prime, so I mean

0:13:26.559 --> 0:13:30.680
<v Speaker 1>hope springs eternal. I guess there. Well, that's the big point,

0:13:30.800 --> 0:13:34.120
<v Speaker 1>right And I remember speaking to somebody else at Valkyrie,

0:13:34.679 --> 0:13:37.800
<v Speaker 1>which is a crypto ascid manager, and they said, if

0:13:37.840 --> 0:13:41.400
<v Speaker 1>thecoin comes down to seventeen thousand or eighteen thousand dollars,

0:13:41.400 --> 0:13:44.240
<v Speaker 1>that they're actually buying at that level. So is this

0:13:44.320 --> 0:13:47.240
<v Speaker 1>something else that we're seeing where you do have people

0:13:47.280 --> 0:13:51.240
<v Speaker 1>who are just going to be long term and I

0:13:51.280 --> 0:13:54.360
<v Speaker 1>really mean like long term believers in the space, and

0:13:54.400 --> 0:13:58.480
<v Speaker 1>they're finding opportunities prices come down and to the point

0:13:58.520 --> 0:14:00.920
<v Speaker 1>if you've been in the space for a long time.

0:14:00.960 --> 0:14:03.000
<v Speaker 1>And when we spoke a little bit about where bitcoin

0:14:03.120 --> 0:14:05.080
<v Speaker 1>was at at sort of the peak of the last

0:14:05.200 --> 0:14:10.240
<v Speaker 1>rate hiking cycle, we're talking what dollars per coin. Even

0:14:10.640 --> 0:14:14.360
<v Speaker 1>now at like nineteen twenty thousand dollars, have you been

0:14:14.360 --> 0:14:16.720
<v Speaker 1>in this space for a long time, You're sitting on

0:14:16.880 --> 0:14:21.120
<v Speaker 1>still just magnitudes of gains. So that makes sense that

0:14:21.160 --> 0:14:23.200
<v Speaker 1>if you're a long term believer that you would just

0:14:23.240 --> 0:14:26.120
<v Speaker 1>sort of cover your eyes and keep buying because the

0:14:26.160 --> 0:14:29.040
<v Speaker 1>line will go up. There will be other October's to

0:14:29.440 --> 0:14:35.520
<v Speaker 1>look forward to October. This last point in this great

0:14:35.600 --> 0:14:37.680
<v Speaker 1>article that you wrote is really interesting to me. I

0:14:37.680 --> 0:14:40.600
<v Speaker 1>think we should look into this more. Basically creating a

0:14:40.680 --> 0:14:44.200
<v Speaker 1>distressed asset market strategy. When it comes to some of

0:14:44.240 --> 0:14:49.560
<v Speaker 1>these dows, those centralized autonomous organizations, I'm still wrapping my

0:14:49.600 --> 0:14:52.640
<v Speaker 1>mind around them, but basically they're supposed still allow the

0:14:52.680 --> 0:14:54.880
<v Speaker 1>holders to vote on different proposals. It's a different way

0:14:54.920 --> 0:14:57.840
<v Speaker 1>to run a business. They have treasuries like they have

0:14:57.960 --> 0:15:01.200
<v Speaker 1>treasury assets, not treasury bonds that they're sitting on, and

0:15:01.240 --> 0:15:06.560
<v Speaker 1>in some cases those treasuries are in distress. The prices

0:15:06.600 --> 0:15:10.640
<v Speaker 1>of the treasuries are beneath the treasury value, so that's

0:15:10.680 --> 0:15:14.120
<v Speaker 1>a really interesting arbitrage. So you can force the DOW

0:15:14.280 --> 0:15:18.040
<v Speaker 1>to potentially vote distributing that money, right, which is cool.

0:15:18.120 --> 0:15:21.840
<v Speaker 1>That feels like another traditional finance strategy coming into the

0:15:21.840 --> 0:15:25.280
<v Speaker 1>world of crypto. So I guess, you know, if you

0:15:25.760 --> 0:15:28.240
<v Speaker 1>want to fight, that's one way to do it, sort

0:15:28.280 --> 0:15:31.760
<v Speaker 1>of force a dow to liquidate the treasury and then

0:15:31.960 --> 0:15:35.840
<v Speaker 1>take those assets. Are you up for I'm up for

0:15:35.960 --> 0:15:38.920
<v Speaker 1>covering someone who wants to fight. If anyone here is

0:15:39.000 --> 0:15:43.960
<v Speaker 1>running that specific strategy, that's fascinating. Yeah, And I think

0:15:44.000 --> 0:15:47.040
<v Speaker 1>that's a really interesting way to sort of pick through

0:15:47.920 --> 0:15:51.120
<v Speaker 1>some of the speculation that we saw, especially in DAWs

0:15:51.120 --> 0:15:54.240
<v Speaker 1>because thats were so hot. I feel like a couple

0:15:54.280 --> 0:15:56.760
<v Speaker 1>of months ago, a year ago too, there was something

0:15:56.800 --> 0:16:01.000
<v Speaker 1>about stealing the Constitute, not stealing by Yeah, I'm thinking

0:16:01.000 --> 0:16:04.880
<v Speaker 1>about stealing the Declaration of Independence. No na, no, no,

0:16:04.880 --> 0:16:07.680
<v Speaker 1>no, no no, buying the constitution. So there was a lot

0:16:07.760 --> 0:16:10.040
<v Speaker 1>of that froth, and you know, just as you would

0:16:10.040 --> 0:16:13.520
<v Speaker 1>see in sort of the distressed bond market, people are

0:16:13.520 --> 0:16:16.000
<v Speaker 1>trying to capitalize on that. Yeah, this was the most

0:16:16.040 --> 0:16:18.840
<v Speaker 1>fun conversation I've ever had. This was the best. This

0:16:18.880 --> 0:16:20.440
<v Speaker 1>was the best part of my Thank you so much

0:16:20.480 --> 0:16:23.400
<v Speaker 1>for joining the podcast. Thanks for having me. You're welcome.

0:16:25.640 --> 0:16:27.560
<v Speaker 1>You can find more of Katie Grydfeldt reporting on the

0:16:27.600 --> 0:16:31.960
<v Speaker 1>Bloomberg Terminal, on Bloomberg dot com and on Twitter. She's

0:16:32.000 --> 0:16:41.680
<v Speaker 1>at k Greyfelt. On the next episode of Bloomberg Crypto,

0:16:42.000 --> 0:16:44.800
<v Speaker 1>we're gonna talk about bitcoin miners who've been having what

0:16:44.880 --> 0:16:47.880
<v Speaker 1>can reasonably be described as a very bad time of late.

0:16:48.560 --> 0:16:51.880
<v Speaker 1>Folding bitcoin prices and soaring energy costs make for a

0:16:52.000 --> 0:16:55.080
<v Speaker 1>tough combination for the companies in this sector. For more

0:16:55.080 --> 0:17:00.120
<v Speaker 1>on the challenges facing these miners, tune in tomorrow. M

0:17:01.240 --> 0:17:04.399
<v Speaker 1>This is Bloomberg Crypto, a daily podcast from Bloomberg and

0:17:04.440 --> 0:17:07.400
<v Speaker 1>I Heart Radio. For more shows from I Heart Radio,

0:17:07.640 --> 0:17:10.760
<v Speaker 1>visit the I Heart Radio app, Apple Podcasts, or wherever

0:17:10.800 --> 0:17:14.359
<v Speaker 1>you get your podcasts. Send us your comments, questions, or

0:17:14.359 --> 0:17:17.400
<v Speaker 1>suggestions for the show to Crypto at Bloomberg dot net

0:17:17.960 --> 0:17:22.399
<v Speaker 1>or find us on Twitter. We're at Crypto. The supervising

0:17:22.440 --> 0:17:26.240
<v Speaker 1>producer of Bloomberg Crypto is Vicky Verglina. Our senior producer

0:17:26.320 --> 0:17:30.200
<v Speaker 1>is Janet Babin. Our producers are Mohammed Farruk and Sharon Barriro.

0:17:30.680 --> 0:17:34.439
<v Speaker 1>Our associate producers are Ty Butler and Moses on Them.

0:17:34.520 --> 0:17:38.439
<v Speaker 1>Desta wonder At is our engineer. Original music by Leo Sidrin.

0:17:40.200 --> 0:17:42.600
<v Speaker 1>I'm Stacy Marie Schmal we'll be back tomorrow.