WEBVTT - Bitcoin Whipsaws as Traders Brace for New Year Rebound

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, Radio News. You're listening to Bloomberg

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<v Speaker 1>Business Week with Carol Masser and Tim Stenoveek on Bloomberg

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<v Speaker 1>Radio Well, with.

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<v Speaker 2>More on the year that was and what may lay ahead,

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<v Speaker 2>particularly in crypto. Now we're joined by Bill Barheit, CEO

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<v Speaker 2>and founder of Abra, a global platform for digital asset

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<v Speaker 2>prime services and wealth management for high net worth individuals

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<v Speaker 2>and institutions. So if you're Abra, Bill, I'm tempted to ask,

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<v Speaker 2>when is the Cadabra coming in? Is it next year?

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<v Speaker 1>Good question, Good to see you, Thanks for having me. Look,

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<v Speaker 1>there's a lot of things that, as they say, history

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<v Speaker 1>doesn't necessarily repeat itself, put it off in rhymes. There's

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<v Speaker 1>a lot of things going on that feel like twenty

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<v Speaker 1>twenty to me, we had a market crash at the beginning,

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<v Speaker 1>COVID induced here, we had you just brought up a

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<v Speaker 1>crash in our Osober which was induced by the initially

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<v Speaker 1>one hundred percent tirep announcement on China, but also some

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<v Speaker 1>serious issues that were uncovered afterwards in a one of

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<v Speaker 1>the large exchanges internationally. And then you know, gold rallied

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<v Speaker 1>right in twenty twenty, Gold rallied from I think it

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<v Speaker 1>was fourteen hundred to two thousand, Silver rallied from about

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<v Speaker 1>twelve to almost thirty. Bitcoin stayed in a range at

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<v Speaker 1>that point, and it's trading very close to where it

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<v Speaker 1>started the year right now. So you know, a lot

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<v Speaker 1>of this sounds familiar. But by the way, after gold peaked,

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<v Speaker 1>we had a rotation into risk assets in twenty twenty,

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<v Speaker 1>and bitcoin went on an epic run from twelve thousand

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<v Speaker 1>to over sixty thousand, right and the market cap of

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<v Speaker 1>the entire crypto space went up by eight x by

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<v Speaker 1>mid twenty twenty one. So now gold is near record

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<v Speaker 1>highs around forty five hundred, silver is around eighty dollars.

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<v Speaker 1>Bitcoin is been sideways this year. I actually think it

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<v Speaker 1>went up significantly after the election because it was front

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<v Speaker 1>running the idea that all of the regulatory obstacles to

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<v Speaker 1>adoption were going to be removed, which has proven mostly

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<v Speaker 1>true with additional legislation pending. Right we talked about October

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<v Speaker 1>liquidation events, So it feels like with the FED and

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<v Speaker 1>other liquidity catalysts, twenty twenty is going to repeat itself.

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<v Speaker 1>In twenty twenty six. Rate cuts, you know, leverage reserves

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<v Speaker 1>and the banks are likely to get really relaxed, which

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<v Speaker 1>means more leverage. Again, regulatory clarity, ETFs, et cetera, et cetera.

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<v Speaker 3>Hey, Bill, one thing I do wonder. I mean, you

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<v Speaker 3>guys are a platform. You see things. You see investors,

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<v Speaker 3>what they are doing, high net worth individuals. Also, institutions

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<v Speaker 3>talk to us about activity, more money coming in, more

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<v Speaker 3>money going out. Now, give us some color on what

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<v Speaker 3>you are seeing on your platform.

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<v Speaker 1>Sure, so I think we're seeing a rotation. There's two

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<v Speaker 1>types of rotations we're seeing. The first is there was

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<v Speaker 1>a well known investor who referred to this as Bitcoin's

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<v Speaker 1>IPO moment. And what I think he meant by that

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<v Speaker 1>is we had people who've invested in bitcoin ten twelve

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<v Speaker 1>years ago who were taking a little bit of profits,

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<v Speaker 1>let's say fifteen to twenty percent profits. That's a lot

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<v Speaker 1>of money because those people have massive concentrations. Their entire wealth,

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<v Speaker 1>if you've been holding for ten years, is probably based

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<v Speaker 1>on bitcoin. And so that IPO moment represented a bit

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<v Speaker 1>of a rotation. Now we're actually seeing a rotation where

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<v Speaker 1>a significant percentage of bitcoin is no longer being held

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<v Speaker 1>on exchanges. So we're not in exchange. We're a wealth

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<v Speaker 1>managing platform. It just like another ria. So money coming

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<v Speaker 1>into a platform like ours tends to stay there for

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<v Speaker 1>a very long time, stays in cold storage for a

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<v Speaker 1>very long time. Now we're seeing a lot of clients

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<v Speaker 1>asking to be able to borrow against those Bitcoin holdings

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<v Speaker 1>because they think that it's reached a long term floor

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<v Speaker 1>with significant.

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<v Speaker 2>Outside Well to your customer is not getting a little

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<v Speaker 2>scared though, because I mean, it is extraordinarily volatile at

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<v Speaker 2>the best of times. But just in the last three months,

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<v Speaker 2>as we could see, we're down, you know, twenty five percent.

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<v Speaker 2>Sure we're higher than we were, you know before the

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<v Speaker 2>President took off us.

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<v Speaker 1>But still yeah, no, that's that's not that's not that's

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<v Speaker 1>a trading phenomenon, right, So in our world, first of all,

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<v Speaker 1>in video at points this year, was and Tesla rule

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<v Speaker 1>were significantly more volatile than bitcoin. I would also posit that, right,

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<v Speaker 1>it's it's traders that drive that price. The incremental float

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<v Speaker 1>that's available for trading, and bitcoin is not nearly as

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<v Speaker 1>big as it used to be because so much of

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<v Speaker 1>it is locked up now, whether it's ETFs or or

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<v Speaker 1>in platforms like ours. Our clients are long term holders.

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<v Speaker 1>They don't sell, and the rotation of money out of

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<v Speaker 1>our platform is nearly zero. And that's not just a

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<v Speaker 1>function of the fact that they like our service, which

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<v Speaker 1>I'm sure they do. It's that, you know, our clients

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<v Speaker 1>are just not interested in selling bitcoin. The biggest question

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<v Speaker 1>I get is what would I possibly sell into? It's

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<v Speaker 1>the best long term you know, capital gains potential asset

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<v Speaker 1>that I own, right, and they're not speculators by and large.

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<v Speaker 3>What's important that you see from the administration that continues

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<v Speaker 3>the support of bitcoin and other cryptocurrencies. We certainly know

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<v Speaker 3>we have a White House safe to say that is

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<v Speaker 3>very favorable to the crypto environment. The president's family is

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<v Speaker 3>certainly involved in it. But what is it that you

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<v Speaker 3>expect in terms of the environment. They're still trying to

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<v Speaker 3>figure out regulatory there's still a long ways to go.

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<v Speaker 3>Does that get solved in twenty twenty six, especially when

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<v Speaker 3>you've got midterm you know, midterms looming and maybe Congress

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<v Speaker 3>coming back to kind of assert itself.

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<v Speaker 1>Good question. I see three things happening. The first is

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<v Speaker 1>we're going to get a second bill passed. In my opinion,

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<v Speaker 1>we got the stable coin legislation the Genius Act passed,

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<v Speaker 1>which I think was pretty reasonable. We're about to get

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<v Speaker 1>the Clarity Act out of committee, I believe, which is

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<v Speaker 1>going to be the biggest overhaul in many ways to

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<v Speaker 1>security and commodities regulation in decades, which is going to

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<v Speaker 1>make it easy for the second part of my thesis,

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<v Speaker 1>which is the tokenization of everything. So you're going to

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<v Speaker 1>see markets globally, including the US star to adopt tokenized

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<v Speaker 1>versions of equities, commodities, real estates, et cetera, et cetera.

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<v Speaker 1>And then the third I think you're going to see

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<v Speaker 1>more of the same as it relates to global and

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<v Speaker 1>specifically US debt markets.

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<v Speaker 2>Right where I have a problem with this build because

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<v Speaker 2>I wonder why replicate and why would you buy the

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<v Speaker 2>replica when you can buy the real thing.

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<v Speaker 1>I wouldn't buy a replica, So that's a good question.

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<v Speaker 1>There's a nuance there. So the early days of tokenization

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<v Speaker 1>are going to be tokenizing existing shares, which adds a

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<v Speaker 1>little bit of value, which I'll explain in a second,

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<v Speaker 1>But the real value comes in native tokenized equity issuance,

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<v Speaker 1>and that has huge advantages. The first is stocks are

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<v Speaker 1>stock markets are closed more than they're open. Okay, crypto

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<v Speaker 1>markets don't close. So now all of a sudden, you

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<v Speaker 1>have the opportunity to have a twenty four to seven

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<v Speaker 1>borderless market, right, that is twenty four to seven liquid,

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<v Speaker 1>which is what investors in twenty twenty five, twenty twenty

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<v Speaker 1>six wants in my opinion, Right, that's number one, number two.

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<v Speaker 3>As I mentioned, Bill just got about thirty seconds, So

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<v Speaker 3>I just want to give you an opportunity to wrap up.

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<v Speaker 1>Go ahead, yeah, sure. And then the second part leads

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<v Speaker 1>to what I said before. What is the fastest scoring

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<v Speaker 1>service we see? It's people borrowing against the bitcoin. If

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<v Speaker 1>you've tokenized Apple shares, Tesla shares, it's now just as

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<v Speaker 1>easy to borrow against the value of those shares without

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<v Speaker 1>having to pay capital gains taxes as it is against bitcoin.

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<v Speaker 1>That is going to drive the tokenization of everything.

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<v Speaker 3>We will continue this no doubt. In twenty twenty six,

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<v Speaker 3>Bill Barheide, He's founder and CEO of Auber, joining us