Mm.
As Bitcoin adoption increases, so do centralizing pressures and institutions and large whales embracing the crypto major as a Treasury Reserve asset and also for yields they can earn from holding the token now that Bitcoin maxis have expressed their concerns, they're weary Bitcoin treasury companies could accelerate the next crypto market crash if these companies dump their Bitcoin.
Maxis also.
Believe lending Bitcoin for a yield reward does violate the core principle of private ownership.
Yet institutions are not slowing down and they're focused on profiting off Bitcoin now through various types of D5 products and protocols.
Joining me live here at the New York Stock Exchange is Thomas Chen, CEO of Function.
Thomas, welcome.
Great to have you on.
Thanks for joining me.
Of course.
Good morning.
Thanks for having me.
Quite an interesting time in the crypto world.
We're seeing a lot of price action when it comes to the crypto majors, but of course, since we're here at the New York Stock Exchange, let's focus on institutional adoption.
So what's happening when it comes to Bitcoin?
Yeah, absolutely.
I think you're seeing a lot of different stories play out in the narrative, especially with regards to Bitcoin.
There's things happening in what I call the cryptonative part of the market, and there's things obviously happening in the institutional market.
Namely digital asset treasury companies, I think right now and it's accelerated way faster than I would have ever predicted.
Digital asset trader companies have accumulated about 100 billion of BTC so far, obviously largely dominated by micro strategy leading the pack, but the question remains.
Once this accumulation phase is over and once more than 80, 100, 150 companies have adopted the Bitcoin standard, if you will, the question is going to be, well, what can I do with this Bitcoin?
How can I deploy it like I deploy my cash, how do I utilize it?
How do I make it productive?
Yeah, and when we're talking about digital asset treasuries referred to by the acronym DATS, it's not just Bitcoin anymore.
We're also hearing about ether as well as other out coins as well, and there's another trend, and that is yield.
So.
Your take when it comes to yield, of course, to address the first point, this is the same crypto risk curve cycle that for those of us who have been in crypto crypto for a while, have seen it play out.
You start on BTC and then when it's risk gone, you start rotating a little bit out into E and other alts.
Now we're just seeing this at a much more institutional level and institutional scale.
With regards to yield, the question is simply Bitcoin is a store of value natively based off the proof of work chain.
It does not generate yield, unlike E, unlike Solana, unlike some of these other old coins.
So the question is, again, if I were to generate yield on BTC, what does that yield look like?
Where is it coming from?
And most importantly, where is my BTC being held when the yield is being generated?
Yeah, and you mentioned a keyword there, and that is rotation, and we hear that word a lot when we're talking about the equity markets, but when we're talking about the crypto markets and Bitcoin dominance and what we're seeing in the other crypto major, what do you think is happening right now?
I think Bitcoin.
Has gotten to a maturity and evolution where there's new buyers coming in, namely sovereigns, and once you get to that stage, the speculators are starting to sell, which is a good sign, right?
Those have been for game for a while, they're starting to sell the ETFs have really built this. institutionally viable rail for institutions to come on and that has really given Bitcoin a bit of a support system that's perhaps agnostic of what the Fed is saying monetarily from a monetary policy standpoint.
So as the institutions start to accumulate and continue to accumulate into position.
That will help us find some support and new buyers of BTC, and then of course the risk game will continue because once Bitcoin is a mature and evolved asset, volatility is going to go down and those looking for more volatility will start rotating to eat, rotating to Solana, etc.
Yeah, and Thomas, I have to ask you, you mentioned the side and that is the central bank.
Of course we're all paying attention to monetary policy and when we think back to the early days of crypto, especially given that you have been in the space for a while, what role does policy, monetary policy, as well as macro factors actually play when we're talking about the Bitcoin space?
I think we have a very American or Western centric view when we talk about the Fed previously.
If you actually look at spot Bitcoin volumes, actually still slight majority from Asia, right?
And yes, Asia does follow some of the moves of the US, but when we talk about Bitcoin markets, we also need to take into account what's happening over at AIPAC and how those retail users, the institutional users are reacting to macro environment.
Uh, I think now, just fast forward to now with the most recent discussions around the Fed and what might be leading up to potential rate cut in mid-September.
It's a double fed, which means a lot of people are crowding in a trade where they want to accumulate as much crypto as possible.
But I think what we really need to look out for is leverage in the system.
So if the Fed does not, if they delay or cancel or postpone the rate cut, then that trade may unwind and we might see a cascade of force sales.
And finally, Thomas, before I let you go, tell me how all this institutional activity is actually impacting Bitcoin when it comes to things like not just price action but also centralization.
I think the Bitcoin maxis and ethos of Bitcoin, has always been to be decentralized and But ultimately if you look at what theo is trying to do, it's a peer to peer.
Payment system or transactional system.
So I think centralization is not a bad thing.
It's not this scandalous word.
Centralization, there are many benefits to it and in this case it's allowing institutions, larger buyers to come in to Bitcoin, diversify the asset base so that we may have a solid foundation to continue to innovate, whether it's defile, whether it's through Tray.
So I think it's a good thing, all things included.
Yeah, and of course there may be some Bitcoin maxis out there watching right now.
I know there's one on our team who is listening right now.
What would you say to them, given the increased institutional adoption?
I think institutions are coming in now and it's a good thing because they're coming in and they're huddling with a capital H.
Well, Thomas, great having you on here at the New York Stock Exchange.
Appreciate your time as well as all of your insights.
Thank you.
