In New York morning trade, we are looking at Bitcoin nearly flat, holding below the 68,000 level.
Now Bitcoin surged back to 69,000 in a short, sharp short squeeze after weeks of selling pressure and analysts saw the rebound and some say that it was a technical bounce driven by heavy bearish bets and also thin trading conditions rather than any major fundamental news while the move sparked a rally and other digital tokens as well.
Including East and even Cardano crypto-related stocks also jumped, including Circle Coinbase Strategy, and Bitine.
Now despite the downturns we have seen since October, more and more crypto trading products have been launched by institutions.
21 shares launching two new crypto ETPs this week.
The 21 shares strategy yield EDP on Euronext Amsterdam and the 21 shares spot.
ETF joining me live this morning is Federico broke a global head of business development at 21 shares.
Federico, great to have you back.
Thank you so much for joining me.
Thanks for having me.
It's great to be here.
Well great timing because we saw a Bitcoin back above that key level.
So what do you make of the price action we've seen so far and the selloff we saw earlier this month.
Yeah look, it's a great question and it's no secret that it's been a rough couple of months for Bitcoin, especially since last October.
You know you mentioned we're trading.
Around 68,000 right now.
That's about 45% off of our all-time highs, but really this volatility is part of investing in Bitcoin and for me the most important thing is understanding exactly what's driving these outcomes for the asset right.
And really when we're thinking about it we point back to three main issues that we see or three main drivers for this price action today.
First is we saw some long-term crypto investors, specifically Bitcoin Wales, begin to sell as we approach all-time highs last year.
Take some of the profit off the table.
We've also seen a big liquidation event in October that deleveraged the entire market for Bitcoin and really changed the market structure entirely as a whole and removed some of that leverage that was propping up some of the price.
And the last thing is really the macro risk off sentiment that we're seeing around software assets and it's not specific to Bitcoin.
It's really impacting all sorts of assets including Microsoft, Amazon, etc. and so for us.
We're often asked by clients, especially, it's gone down to 6800 to 65,000.
Can it go any further?
And the honest answer when you look at history is it could go further, right?
We saw in 2014, 2018, and 2022 that Bitcoin drew down over 75% every single time in those years, and that's what really gave birth to the four year cycle of Bitcoin.
Some of the whales that started selling last year actually got ahead of the curve and started selling because they expected this to continue to happen.
And so this is part of the investment journey for Bitcoin, but the most important thing for us is that the investment thesis and the overall support network around the asset remain exactly the same.
We have more support from regulation in Washington than ever before.
We have ETFs bringing in new buyers every single day and more institutional capital into the industry, and we have a more robust capital markets infrastructure than ever before around crypto assets.
And when you think about the performance of Bitcoin in the past year and even year to date, we are looking at The shift so you mentioned as point number 2 of your 3 points about how the structure has changed since last October.
So for the layers out there, what does that mean?
That means that people that were taking margin out to continue buying more and more Bitcoin were now forced to sell some of those positions.
And so that leverage that we saw in the market, which basically meant there was additional lending going on in the background of some of these purchases, is removed.
And so as you sell down some of those positions, we see selling pressure forcing the prices going down. and we continue to hear about institutional adoption as well as the maturity of this market compared to past cycles.
So what do you actually seeing it's a great question and actually one of the things that I love talking about the most because despite the price action we've actually seen a lot of interest, especially from more professional investors over the last couple of months when it comes to intermediaries, whether they're wealth platforms or wirehouses or.
Across the country, a lot of them are looking at this price action as a good opportunity for their end clients to actually participate and come to the market for the first time.
Just as recently as this week, we've seen over $2 billion in inflows into Bitcoin ETFs despite trading around 6,565,000.
So certainly there's a lot of intent and appetite from the market, and I think there's a lot more capital that could come and benefit from this price.
And when it comes to the divergence in terms of trading between the institutional, professional, as well as retail investors, what's really happening?
What is the data looking like right now it's a great question.
So ETF holders have predominantly held throughout the volatility.
If you look at NA across the Bitcoin ETF complex, we're around $53 billion in total assets since the launch of these products, that's about 85% of the all-time highs that we saw for N&A and ETFs.
So really what that tells The majority of investors know that there is volatility when entering this asset class and are comfortable riding this cycle through the next hopefully uptick in prices.
At the more retail side and the more crypto native side, we're actually seeing similar trends in on-chain data and we're seeing more accounts that hold over $10,000 worth of Bitcoin popping up on chain every single day.
And so what that tells me is that there's a lot of conviction both in the crypto native side and the more retail trading side, as well as the more professional investors right now. and on this Thursday morning a lot of eyes are on artificial intelligence in particular earnings and you mentioned some of the disruption and how that is affecting some key names in the tech sector.
So how is that affecting it's a great question.
I think right now there's a view across investors that software companies that could potentially be disrupted by AI are unfavorable or they're out of favor and if you think about. and crypto more broadly at the very, very core of it, it is a software.
It is a few lines of code and so I think it's getting looped into a lot of these conversations that we're having around companies like Microsoft and Amazon and what their mos are in a world where AI is as powerful as we've seen these last couple of months and before I let you go, we are fast approaching the opening bell.
I do want to ask you about your recent launches in terms of products.
So what is the strategy here and how. we're really excited about expanding our US product footprint in particular.
We recently launched our SUE crypto ETF, as you mentioned, and it marks over 10 crypto ETFs that we have in the US market today, and our product strategy has really diverged in the sense of the types of strategies that we're bringing to market.
We have spot trackers like the SUI and the Bitcoin products.
We have index products levered and soon to be an alpha strategy as well for the US market.
And finally before I let you go, one thing I do want to ask you about is the regulatory outlook because here on Wall Street we're paying attention to what comes out of the nation's capital.
So what do you expect and what's realistic?
Well the first thing regarding regulation, I think it's continued to be supportive of our market broadly if you look at the announcement from the SEC last week, they're basically classifying.
Money market funds just like they are for the rest of crypto in terms of tokenized real world treasuries.
And so what we've seen from Washington is continued support and more infrastructure around the asset class.
And regarding tokenization that is a key thing that we're watching.
So when it comes to that innovation both in the US as well as overseas, what can we expect?
Yes, we've seen companies like Facebook announced already that stablecoins are going to be trading or available on Facebook, you know, Instagram, WhatsApp, which is incredible news.
We've seen conversations led by Larry Fink and BlackRock around the opportunity to tokenize all.
Real world assets, including most recently their entire ATF book which would be really exciting to see unchained.
So there's a lot of momentum.
I think there's a lot of excitement about what tokenization can be, especially from an operational scale perspective, and we're excited to see how that disrupts financial markets globally.
Well that is something we'll continue to monitor.
So thank you so much for joining us today Federica thank you so much for your perspective.
Thank you.
