Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. You're listening to Bloomberg
Speaker 1: Business Week with Carol Masser and Tim Stenoveek on Bloomberg
Speaker 1: Radio Well, with.
Speaker 2: More on the year that was and what may lay ahead,
Speaker 2: particularly in crypto. Now we're joined by Bill Barheit, CEO
Speaker 2: and founder of Abra, a global platform for digital asset
Speaker 2: prime services and wealth management for high net worth individuals
Speaker 2: and institutions. So if you're Abra, Bill, I'm tempted to ask,
Speaker 2: when is the Cadabra coming in? 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 our Osober which was induced by the initially
Speaker 1: one hundred percent tirep announcement on China, but also some
Speaker 1: serious issues that were uncovered afterwards in a one of
Speaker 1: the large exchanges internationally. And then you know, gold rallied
Speaker 1: right 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 is around eighty dollars.
Speaker 1: Bitcoin is 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 were 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 clarity, ETFs, et cetera, 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. Now, give us some color on what
Speaker 3: you are seeing on your platform.
Speaker 1: Sure, so I think we're seeing a rotation. There's two
Speaker 1: types of rotations 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 profits. That's a lot
Speaker 1: of money because those people have massive concentrations. Their entire wealth,
Speaker 1: if you've been holding for ten years, is probably based
Speaker 1: on bitcoin. And so that IPO moment represented a bit
Speaker 1: of a rotation. Now we're actually seeing a rotation where
Speaker 1: a significant percentage of bitcoin is no longer being held
Speaker 1: on exchanges. So we're not in exchange. We're a wealth
Speaker 1: managing platform. It just like another ria. So money coming
Speaker 1: into a platform like ours tends to stay there for
Speaker 1: a very long time, stays in cold storage for a
Speaker 1: very long time. Now we're seeing a lot of clients
Speaker 1: asking to be able to borrow against those Bitcoin holdings
Speaker 1: because they think that it's reached a long term floor
Speaker 1: with significant.
Speaker 2: Outside Well to your customer is not getting a little
Speaker 2: scared though, because I mean, it is extraordinarily volatile at
Speaker 2: the best of times. But just in the last three months,
Speaker 2: as 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 that's not that's
Speaker 1: a trading phenomenon, right, So in our world, first of all,
Speaker 1: in video at points this year, was and Tesla rule
Speaker 1: were significantly more volatile than bitcoin. I would also posit that, right,
Speaker 1: it's it's traders that drive that price. The incremental float
Speaker 1: that's available for trading, and bitcoin is not nearly as
Speaker 1: big as it used to be because so much of
Speaker 1: it is locked up now, whether it's ETFs or or
Speaker 1: in platforms like ours. Our clients are long term holders.
Speaker 1: They don't sell, and the rotation of money out of
Speaker 1: our platform is nearly zero. And that's not just a
Speaker 1: function of the fact that they like our service, which
Speaker 1: I'm sure they do. It's that, you know, our clients
Speaker 1: are just not interested in selling bitcoin. The biggest question
Speaker 1: I get is what would I possibly sell into? It's
Speaker 1: the best long term you know, capital gains potential asset
Speaker 1: that I own, right, and they're not speculators by and large.
Speaker 3: What's important that you see from the administration that continues
Speaker 3: the support of bitcoin and other cryptocurrencies. We certainly know
Speaker 3: we have a White House safe to say that is
Speaker 3: very favorable to the crypto environment. The president's family is
Speaker 3: certainly involved in it. But what is it that you
Speaker 3: expect in terms of the environment. They're still trying to
Speaker 3: figure out regulatory there's still a long ways to go.
Speaker 3: Does that get solved in twenty twenty six, especially when
Speaker 3: you've got midterm you know, midterms looming and maybe Congress
Speaker 3: 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: security and commodities regulation in decades, which is going to
Speaker 1: make it easy for the second part of my thesis,
Speaker 1: which is the tokenization of everything. So you're going to
Speaker 1: see markets globally, including the US star to adopt tokenized
Speaker 1: versions of equities, commodities, real estates, 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 liquid,
Speaker 1: which is what investors in twenty twenty five, twenty twenty
Speaker 1: six 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 Barheide, He's founder and CEO of Auber, joining us