Bitcoin’s Surprising Rally Amid Geopolitical Tensions: Insights from William Quigley

Welcome back to market movers.

The opening bell, while much needed relief coming to the crypto market yesterday.

Bitcoin spiking to its highest level in about a month as hundreds of millions of dollars worth of shorts were liquidated.

Meanwhile, President Trump is also taking aim at banks and accused them of holding up crypto legislation.

JPMorgan Chase CEO Jamie Dimon has also joined the debate.

He says there should be bank-like regulations on stablecoin interest rewards.

Now the Clarity Act has also hit a new roadblock as banks say they can't accept a proposed compromise from the White House.

Also in crypto, plenty of headlines and big news for crack in the exchange is the first digital asset platform to receive access to the Fed Reserve's payment system.

While joining me this morning is.

Quigley, co-founder of Wax and Tether, well, good morning.

Thank you so much for joining me.

So in New York morning trade, we are looking at Bitcoin, holding on to most of those gains from yesterday's rally.

So given the geopolitical situation in the Middle East, how big of a factor is uncertainty and what do you make of the reaction that we're actually seeing unfold in crypto markets?

Well, it's a little surprising, the um the fact that Bitcoin has recovered in the face of, you know, risks of an extended war in the Middle East and whatnot.

And I say that because uh Bitcoin used to be an asset that was designed to hedge against geopolitical risks.

And certain governmental risks, overregulation and a risks against Accounts being seized and so forth, but you know, in the last couple of years, Bitcoin has moved really in lockstep with the with the financial markets, the broader financial markets, and so here we see a bit of a change.

It's, you know, Bitcoin's a bit bipolar, I guess I would say, where, where I would have expected it to drop.

Instead it's rallied a bit, whatever, 7 or 8% in the last few days.

Which is good.

The fear and greed index has gone from as low as 5, so deep fear.

Now we're up past 2022 this morning.

So, uh, there seems to be some interest in accumulating Bitcoin right now, despite what has, in the last couple of years anyway, been a time to dump it.

Yes, and I think you bring up an important point because when we're talking about a rally in the past 24 hours we have to keep in mind that we are well off those record highs we saw at the end of last year.

So of course we're paying attention to what is coming out of the White House and the. situation in the Middle East, but Trump did call the behavior of big banks on crypto legislation quote unacceptable.

So what do you make of his statement on the holdup over stable coin yield that is delaying crypto bills here.

Yeah, well, what I would say, and of course for your for your listeners, you have stablecoin issuers wanting to be able to provide interest, basically some kind of return on your stablecoin deposits.

You have banks objecting to that because banks for the most part have been able to hold bank deposits from consumers without paying any interest, and they worry that deposits will leave the banks and go to stablecoin issuers if they.

Or if the stablecoin issuers are allowed to offer interest rates, which I would say is true.

Um, and so I understand why banks don't like it, and I understand why stablecoin issuers really want it, because that's a way for them to attract more, uh, people into stablecoins.

For me, if I were the banks, uh, or if I was put on top of regulating things for consumers and the safety consumers, here's where I would be worried.

Consumers are bizarrely uninterested in how companies make money that when they give those companies any kind of their deposits.

Traditionally they just don't seem to care.

We saw this in 20.

21 and 2022 when a bunch of people deposited money into very risky crypto lending platforms, not understanding how these lending platforms were paying them 20 to 25% annualized interest.

Well, you don't, you don't pay that unless you're taking great risks with the customer's deposits.

What I would like to see is for the stablecoin issuers to Transparently disclose how they are earning yields.

And giving that information back to the consumers so that we don't get into a situation where the stablecoin issuers take great risks in order to attract more people by paying them higher interest rates. and rates are a key part of this equation here, but building on what you just said, we have been hearing about plenty of announcements coming out.

So I do want to get your take on cracking.

So the company won a Federal Reserve master account for its cracking financial segment.

So that does make it the first digital asset platform to receive access to the Federal Reserve's payment system.

So how do you think this will play out and what does it actually mean?

Well, it's extremely important.

It sounds, and it probably is for most people in the, uh, you know, the deep infrastructure part of the financial system, maybe not as important to consumers, but to businesses in particular, and of course to and this is incredibly important because normally smaller banks and if any digital company is going to get a bank license, it's going to be a smaller institution.

They have to work through another bank or what we call a correspondent bank.

And therefore they are subject to the rules and all the inefficiencies of that bank and of course the fees that that bank will charge them.

So for a company like Kraken to be able to go directly to the Fed, it means that it can settle transactions instantly.

Its, its costs are much lower and it gets us closer to what we call atomic settlement, which is the idea that Both sides of the transaction get what they've bargained for at the same time, and one of the great risks in financial transactions is that one side fails, the counterparty fails to do what it's supposed to do.

So when you merge crypto and the traditional financial systems together, you can make sure that both parties get what they wanted and that it's irreversible.

So I think It is a, it's a super important aspect of getting us to the tokenization economy which, you know, we've been working on for many, many years.

And will finally before I let you go, we are counting down to the market open here on Wall Street, but we are about 24 hours away from the US jobs report and the labor market is something we're keeping our eyes on and I know you have an opinion on AI and jobs, especially that. thought exercise that was written from the perspective of 2028.

So we know that memo visibly spooked the markets last week and also exposed some of that unease by investors out there.

So do you think we are actually approaching a tipping point?

I don't I think like a lot of things when it comes to technology, and I've been investing for over 3 decades, uh, the, the promise of what you're going to do and the reality of getting it done is much bigger than you normally can see when you start out.

And so, uh, I'm not, uh, I'm not as big a fear monger that all jobs are going to disappear, AI is gonna take over.

I think it will, we will march towards automation and automation will switch people's jobs.

I think it'll create new ones, but I think there's a lot more, um, writing in magazines and breathless reporting about bad things that are going to happen in the near term.

Than I think what's realistic.

So I'm, I'm much more optimistic about the job situation than I think a lot of the big bulls in AI are.

Well, thank you so much for your time today.

I appreciate your take on the labor market, artificial intelligence, and of course what's happening in digital assets.