Bitcoin Volatility: Understanding Market Fluctuations

And Welcome back to Market Movers, the opening bell.

Well, Canton Network is targeting institutions helping multiple parties coordinate workflows without sharing data widely.

Now it uses permission domains as well as Damo contracts to keep transactions private, traceable, and reliable.

Since 2022, Europe, Hong Kong, and the Middle East partners have moved from pilots to regular digital bond transactions faster.

And with fewer failures than traditional systems, now Canton Coin trades on multiple venues with a CCSD benchmark to track prices.

Rewards do focus on users based on settlements as well as redemptions and collateral moves.

Joining me this morning to weigh in and also weigh in on Bitcoin prices is Adam Morgan McCarthy, senior research analyst at Keiko.

Well, good morning.

And good afternoon to you, Adam.

Thank you so much for joining us.

So first and foremost, we're keeping a close eye on many headlines this morning, including that cloud flare outage that you mentioned earlier.

So given the volatility across markets, I do want to start out by looking at the Canton network.

So tell us what all of this means when it comes to institutional use on the Canton ecosystem.

Yeah, for sure.

Thanks for having me.

Um, I'm glad we, we're able to connect even though there's some internet issues today, but, um, yeah, I think the Canton Network is a very interesting project.

I've been covering it now for 3 years, even before I joined Keiko, and The, the kind of sign of something we count on is that they had this huge buy-in from some of the biggest financial institutions in the world working on there, but you didn't hear too much about it for three years.

It wasn't about an airdrop, a token generating event.

They were building in the background.

There were things happening, you know, more recently, we've done some stuff with Broadridge on their distributed, distributed ledger repo, that's doing, oh, I think over $300 billion a day in volume now.

So like, I wrote a recent report, I think I, I coined it network, network before Net Worth.

They built the network, they built the community and the network effects before they launched a token.

And it helped to kind of incentivize actual building as you saw there, A rewards, being a builder, building something that people use, using the apps, that's what's driving more engagement.

That's what's driving rewards.

That's what's getting people can on coins.

So it's been a really interesting product, uh, project to kind of track over the last few years.

And now it's gone on the market with it's token going live, which was super interesting as well.

We saw pre-market perps launched.

Towards the end of October, there's huge uptake on Binance.

This is, this is a new market.

Binance only launched these last year that you don't often see a pre-market perpetual future product before the spot product, but because of the, you know, no, no, no delivery and cash settlement, you can actually, you can launch this before token launches.

There were huge volumes.

There was, you know, 7 to 8 million in open interest on CC token pre-market perps, which, you know, it's kind of unheard of for a new token that didn't even have a spot market.

That was followed up then last week by the spot market launch, which was, oh, there was some good appetite for the token.

There was a lot of volume and there were some decent listings across major venues, you know, so.

That's all uptick again and the perps activity.

But what was interesting, I think more so today was that like, we saw there's liquidity in that underlying market.

You can see the 1% market depth here is pretty solid on, on venues like By bit, um, you know, cracking, but what we saw today, we should really help that, which is going to be the next kicker for activity and for volumes was an ETP listing in Europe.

So our partner 21 Shares just launched the Canton ETP, the first product of its kind in Europe.

That's going to open up the network now.

And the exposure to the network to even more people.

So before this, you know, you, you had CC on these, on these lists of venues we just showed you last week, with the pre-market perp, you've already got an ETP, you know, it took, it took nearly 15 years, I think, for the finance, uh, for the Bitcoin ETF to launch.

So this is really moving on a, on a, on a, on a healthy tick, especially for something that's got so many traditional players involved.

You know, we're proud to support that product with 21 shares, and I think there's a similar filing that will have exposure to that product in the US.

And it's just, it's showing that there is institutional demand for crypto done right.

You know, there's always, I think it kind of anecdotally, if you watch TV they use crypto as a sort of, oh, they're moving things on, on crypto, and it's, but in reality, crypto is quite, you know, transparent and that's kept a lot of institutions away from using crypto.

But the benefit of Canton is that you've got this privacy enablement.

So you can do everything out in the open, but you can do your certain transactions we could sort of, you know, A shield over them.

That makes traditional players a little more comfortable transacting, a little more uh excited to use the the network.

And the other thing I think it was interesting from speaking of players that are involved and like we are.

I do want to ask you about what we're seeing in the crypto markets since we have limited time here.

So overnight we saw Bitcoin fall below that 90,000 level and year to date gains have been wiped out.

So what do you make of what we're seeing across crypto, in particular, the crypto majors?

Yeah, I think it's probably just as well as the cloud for outage is happening because no one wants to look at these charts right now.

The, um, the market's tanking.

I think only, only a month ago becomes around all time highs under 26K.

I, you know, I think there's two main things kind of weighing on it, the Fed, uh, for sure, and, you know, Bitcoin's correlation equities has, has increased and we kind of see when that happens, when everything's down, everything, everything's highly correlated and they're going down.

It's all kind of going down together.

We're seeing a lot, like a coin flip, I think Michael called it before I, I joined, uh, at the Fed rate cut in December.

That's, that's creating some kind of headwinds for Bitcoin for sure.

And there's also some fears about AI.

I think that, that create a systemic risk for, for Bitcoin and the market more broadly, especially as it's so highly correlated to equities right now.

You know, there's several major, uh, AI firms that are with lofty evaluations.

I think cities, they, uh, they, their head of micro trading said that there's, we're in bubble territory since May now.

So if those, if those systemic, uh, equities go down, that's going to drive Bitcoin lower, especially with so highly correlated.

It's already down maybe, you know, 30, 35K from its high.

So.

That's not great and it kind of compounds, uh, you know, we're coming into a holiday week next week when liquidity will dry up.

It'll be interesting to see what happens with ETF flows.

Uh, we could see some that flows from them, and maybe, you know, as you come to the year end, people are going to kind of power off their bitcoin exposure and their exposure due to those headwinds until we get some certainty on rates.

And certainly if there is, you know, uh, uh, the risk of an AI bubble kind of ending, you're, you're probably not going to see those rates go down, right?

You know.

Um, things could, things, things could change there.

Who knows what's going to happen with inflation and then you've got the, uh, US election next year, um, US midterm elections next year, which could lead to some choppiness, um, as we've seen, you know, sort of from the new administration politically, they're not afraid to, to kind of try out some feelers out there and see.

You know, maybe speak before the, uh, act and then see how that goes.

So that's, that's caused some choppiness in the market already this year.

We could see more of that, especially with some other, you know, things coming down the line like Fed Chair Powell, his terms finishing in May.

So Fed, AI and more Fed and the elections next year could be headwinds for Bitcoin, I think.

OK, Adam, well, we will have to leave it there, but thank you so much for joining us today and thank you so much for sharing all of your insights.

Thanks for having me.