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- [00:00]
Marcus Thielen
We are not anywhere near recession. I think the market, the equity market has priced in some risk. I think crypto markets have their own kind of little tantrums. But I think in the end the economy seems to be moving ahead and I think we, we might need to wait until we're really fully into the earnings season and hear what, what the corporate executives saying in terms of what the outlook really is.
- [00:29]
Host
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- [01:16]
Marcus Thielen
Hey, thanks for having me.
- [01:17]
Host
Of course. Now, bitcoin rose slightly this morning. Talk to me about what you were watching this weekend and what you're looking at as we head into a new week.
- [01:28]
Marcus Thielen
Yeah, thanks for having me. Of course there were like, you know, many upgrades, you know, last week, you know, various change chains, you know, around Ethereum, you know, BNB and so on. I think a lot of stuff happened, but I think the whole geopolitics, the whole, you know, fat, I think that's kind of the key driver because that's eventually how people, you know, judge liquidity. That's how people judge kind of like the risk on, risk off environment. You know, we have been kind of focusing on this quite, you know, intensely over the last couple of days. We were working for, you know, we were looking for some, some hints from Trump. I think we sort of got them actually last Friday that, you know, he's more flexible. So I think the bottom line for us is really, or was really that, you know, with the S and P down, you know, 10% and we don't think there's any recession any near, near term that we were sort of coming into the window where we probably saw some, you know, the last bits of selling pressure and I think we saw the market Kind of reversing, you know, last week on A, on the Trump comments, B, on on Fed, you know, we had of course the futures and options expiry, you know, from the equity market. And of course you're going into the last week of the quarter end and quarter end usually has a lot of rebalancing, you know, coming from pension funds, from real money investors and you know, with bonds outperforming equities, you know, significantly this month and this quarter, really I think we going to see some rally in equities. I think that's going to help bitcoin overall.
- [02:56]
Host
All right, a lot there that I want to unpack. Let's start with the tariffs signals that Trev might be a little bit more flexible on tariffs than previously thought. Talk to me a little bit about what that means for crypto markets and what that might look like from a global economic perspective when it comes to the rollout of some sort of tariff.
- [03:19]
Marcus Thielen
Yeah, I think that the two points really to note here is a he mentioned the word flexible but also targeted. So those two words are really indicating that there is some negotiation room and there might not be as harsh as expected. And of course the implication here is that we might not see as a sharp increase in inflation as some people have expected. And I think that's really how the risk assets market have been really being really punished over the last couple of weeks. But I think if there's sort of like a repricing before the, you know, the big April 2nd tariff day really that everybody has been eyeing, I think that's kind of like when the market starts rebounding. So it's really these two comments of, of flexible and targeted that's really where the market starts to look through it at the risk of indicator from the tariffs.
- [04:13]
Host
Now I want to come back to that Fed meeting that happened last Wednesday. A lot of talk of a potential recession. Before that meeting we had Fed Chair Jerome Powell come out and through his remarks said, you know, not really a recession in the Fed's eyes on the horizon. Talk to me about the potential for a recession. What did you take away from those remarks on Wednesday?
- [04:39]
Marcus Thielen
So it's not just his remarks in the post FOMC meeting, but it's also his remarks on the week before. So during the week before he also indicated that inflation might not be such a big concern, that the Fed might use the word transitory again to really look through it. And I think that sort of like indicates really that there's probably some more rate cuts awaiting later this year. We are not too optimistic there's going to be any rate cut any time in the immediate future. So probably maybe only in September. But nevertheless the market took this his comments a little bit more dovishly. You know, we were of course expecting also dial back in the quantitative tightening. I mean the Fed could actually also have paused really. So they went sort of like, you know, lukewarm really into the meeting. They sort of like I think delivered what people were hoping but they didn't really deliver a lot more. So they still indicated they're going to be on pause for the foreseeable future basically. But nevertheless, I think the market has been pricing in, you know, as you correctly said, there's been a lot of talk about potential recession. I think we are not anywhere near recession. I think the market, the equity market has priced in some risk. I think crypto markets have their own kind of little tantrums, you know, that we can talk about a little bit more in the new, you know, in the later part of the of the discussion here. But I think in the end the economy seems to be moving ahead and I think we, we might need to wait until we're really fully into the earnings season and hear what, what the corporate executives saying in terms of what the outlook really is. But again, you know, the market overall has priced in a 10% correction already and unless we really entering a real recession, I think then, you know, then we might be going lower. But I don't think anybody really expects this especially you know, since, since the Fed has indicated the Fed put is really alive here.
- [06:37]
Host
Are we still expecting two rate cuts this year or are you expecting to see two rate cuts this year?
- [06:44]
Marcus Thielen
I would expect two rate cuts but they're probably going to be really in the, in the later part of the year, probably some sometime September, you know, October, November during, during that period. I don't think there's anything going to happen before the summer. You know, the market is pricing in June as a first rate cut. I personally think that's going to be pushed out a little bit but I think the Powell has really kept these two rate cuts alive and I think that's what was the market was really looking forward to.
- [07:12]
Host
Now you mentioned at the top of the interview that we're expecting to see an equities rally that will pull the crypto markets up with it a little bit. Talk to a little bit about what you're expecting to see there and how that's going to impact the crypto markets in the short term.
- [07:28]
Marcus Thielen
So we think that because we're going into the last week of this quarter. There's going to be a lot of rebalancing portfolio flows. So pension funds have made positive returns with their bond holdings but lost on the equity holdings. So they're going to be some rebalancing, taking profit on the bonds, reallocating into equities. And we think that's going to kind of push equities up a little bit this week when we going into the earnings season the next month. There's still going to be some kind of caution around that. But I think in the end bitcoin I think will benefit. We altcoins, you know, they look pretty bummed out but I think there can be some, you know, movements there as well, selectively. But overall, you know, we think bitcoin can probably rally back into this 90 to 95,000 area. I don't think we're going to make any new all time highs anytime soon really because I don't there are so many kind of market structure to liquidity is not really that strong. So there's no real indications here that we're going to see a big push or big rally really. And I think when we look at last year we had a similar scenario where sort of, you know, we rallied one month in February and then we released another month in sort of October, November period this, this time. But then the rest of the year we sort of went sideways and we think we're a little bit in this trading range but we still can make probably like 10% in this move. And I think that's kind of like what we're looking forward to.
- [08:54]
Host
When do you think bitcoin hits its new all time high?
- [08:58]
Marcus Thielen
Probably in Q4. I mean we are a little bit conservative. We don't see any big catalysts. Of course the market can change, you know, very quickly. But you know, we don't think we're going to have any tailwinds really from the Fed until really Q Q4. We don't think there's any other like, you know, big, big announcements, you know, from the bitcoin strategic reserve. I think it was really unfortunately, you know, hyped up, you know, a week before the announcement that they're going to buy all these altcoins, which they didn't do. There was all the expectations about revaluing the gold holdings using some of the proceeds to buy bitcoin. There was also the discussion about, you know, the sovereign wealth fund for the US Which I think will happen. But again, the question really is will this fund be financed by, you know, by, by tariff revenues. And those tariff revenues could be then used to buy altcoins. So it's a lot of kind of like, you know, lots of ideas flowing around, but if really something happens, it might simply, you know, take more time. I think there. It's an interesting avenue that the market sort of like has forgotten now about the sovereign wealth fund, which it really seems to be happening because, you know, key people are being like, you know, hired for this role. So I think it is happening. Something, you know, is really, you know, cooking, you know, in the kitchen here. But I think we don't really know, know a lot about, you know, what this actually does. And I think the market was hoping that the US Will buy more bitcoin. And again, the US hasn't even announced how many bitcoins they would really put into this strategic reserve. Right. I think the market is a little bit divided. There's, of course, a large part, you know, belongs to Bitfinex, which is probably likely being returned. So in the end, the US might only have like a Bitcoin reserve of like 8 billion, which is like half the size of, of, you know, China's reserve right now, if you might call it reserve or, you know, confiscated bitcoins. So I think, you know, Trump would certainly not be happy if, you know, the US had had the second largest strategic bitcoin reserve. So something has to be announced there. But I think we are not there that we hear anything new here.
- [11:02]
Host
What would just put this into context for our audience here? What would a sovereign wealth fund mean for the US in your eyes?
- [11:10]
Marcus Thielen
It means that there's a strategic view of accumulating assets. Right. It's really like a buy and hold strategy where the US Government also becomes like a partner, like an investment partner. We have seen this, of course, with all these sovereign wealth funds around the world, from, you know, from Singapore to Norway, where it's really, really accumulating assets for the long term. And of course, you know, this is really like a buy and hold strategy which, which cannot be sold or won't be sold. And I think that kind of helps, of course, to squeeze asset prices higher. And I think that's what everybody wants who holds, you know, assets right now. And I think that's sort of like where we going. And I think the idea, for example, is because of Doge and some of the tariffs that are being collected that this is going to be put to work in a, you know, in a responsible and in a, in a higher yielding strategy. Right. I mean, the U.S. can of course, borrow something, you know, at around 4%, you know, a few years ago, some countries, even Europe, that could borrow at negative interest rates. I don't know why nobody has really done it. And then really sort of like leverage up a little bit and put the money into assets that can yield, you know, a lot more. I think we have seen this over the last, you know, years, if not even decades. There are certain strategies, there are certain asset classes that generate more than 5% per year with a less, you know, with a very low risk, really. And I think that's kind of the idea that the US Might actually issue some bonds and just have a benchmark of like 4% and trying to beat that. I think we have seen this from other countries that have sovereign wealth funds. And especially since there is a lot of valuable assets, you know, that we have seen, you know, all the tech companies and so on there, you know, generating a lot more free cash flow and then a higher earnings yield. And I think that makes sense to issue debt and buy, for example, shares of those companies.
- [12:54]
Host
I want to come back to alts. We were briefly talking about ALTS prior to this, and I want to ask you, how closely are you watching the assets that are being held by World Liberty Financial? Now, this is a defi project that is started by the Trump family. They hold a variety of different crypto assets in their Treasury. How closely are you watching those assets and are they outperforming assets that are not in that Treasury?
- [13:25]
Marcus Thielen
I mean, the, you know, the quick answer is, you know, I don't think it really matters too much. Right. I mean, the largest holding is Ethereum, and that went down a lot since they have bought it. So from a market timing perspective, it's not really a trigger or a key signal. I think we have, of course, seen many verbal interventions, you know, from, you know, from Eric Trump, really, that it's a, you know, that Ethereum is a good buy. I think he said this at, you know, 2800, at 2,400, at 2000 and lower and so on. So I don't think that really matters. I think what's more interesting is that the altcoin market is not just like one asset class or one category. I think it needs to be broken down into various sectors and in sectors where, where there is momentum, where there is positive growth. But since really the, the Trump, you know, Meme Coin that was launched just a few days before its inauguration, I think the whole Meme Coin story also has, you know, come down a lot. I think there's a lot of happening with, you know, pump fun and you know, how volumes mean coin launches have, have declined and you know, a lot of the other altcoins are actually not doing that well. So there's not really a lot of stuff happening in the defi sector itself. And I think this is. Goes where your question is. It's more kind of like a defi play. But I think right now nobody uses really defi per se. It's very different than during the previous bull market when of course, defi was offering, you know, higher yields. And I think the idea there was really to really, you know, take advantage of those yields because there was a lot more leverage in the system. And of course right now the funding rates have really compressed to near zero, so there's not much speculation going on. And also, you know, volumes in altcoins are very low, so there's not a lot of interest right now. So it actually takes probably something a little bit bigger than just being the Fed, sort of like still indicating some rate cuts later this year for really the altcoin market to turn around. So it needs a new narrative and we think that's going to be very difficult to really engineer right now and I think that's why, yes, we are a little bit bullish right now, but we still think we're going to be in a, in a, in a big range.
- [15:29]
Host
Now earlier you were talking about the equities market. Curious what crypto equities you're watching. I know this morning this story about Coinbase being in talks to acquire Deribit has popped up again. That's been a narrative that's popped up in the headlines a few times. What equities are you watching? Should we be watching Coinbase if they acquire dare bit?
- [15:53]
Marcus Thielen
Yeah, I think some of the crypto equities are quite interesting. I think, you know, prices actually have come back a lot for also for, for, you know, for the miners, you know, when we look at minor revenues, they have still, you know, contracted, you know, a lot, but some of them have really, you know, dropped by 50, 60%. So versus Bitcoin is sort of like down, you know, 10, 15% from, from the high. So I think some of them might be quite an interesting levels, especially when we look at some of the data mining capabilities and relationships there. Potential really. Relationships there. I think that's quite interesting. You know, I think for somebody like Coinbase, I think you need to have more like a leveraged retail cycle really. I think we are sort of like at the top of the range for, I think for the theme versus I think the stocks. I don't think they express the right leverage. I think more like a diversified company. For example, like, I think Galaxy would be quite interesting. And of course, you know, the whole story of one microstrategy doesn't really die down. I think the, the nav, yes, the NAV has declined, you know, a lot from, you know, 300%, you know, nav overvalued basically to still like something like I think 80% now. So the shares are still quite overvalued. But I think people still, you know, buy into the narrative that microstrategy will become something bigger than just a bitcoin holders. Right. Something can be built around in terms of like a, you know, like a digital bank basically in the future. So I think that story, you know, is alive especially because volatility has, you know, come back and, and it might be sort of like a, like, like a cheaper way to really to play like a more leveraged, leveraged bet. As long as people believe that the Navy can still expand, you know, over a longer time, you know, we think the NAV is probably going to go back to sort of like a 1 level instead of being overvalued. But again, I think if we sort of like coming into, you know, like a scenario, which was one of our biggest theme for this year, there's going to be a lot more IPOs happening. And we calculated there could be potentially something like, you know, US$130 billion worth of IPOs trying to be listed this year. Early next year there's going to be a big interest from Wall street to keep actually prices for bitcoin at least, you know, quite high here and to keep the, the story and the momentum going. Because again, there are so many investors that have invested a lot of these crypto companies, exchanges and so on, and of course they want to see some exit liquidity here. And for that I think we need to keep the bitcoin price high to offer that kind of exit potential for people.
- [18:29]
Host
All right, Marcus, just before I let you go, for folks who are watching the crypto markets, who are investing in the crypto markets, what are three assets that they should be watching as we head into this week?
- [18:41]
Marcus Thielen
Well, we have been, you know, focused on hyper liquid, for example, right. There was a trade we put out, you know, last week to our subscribers simply because it has, you know, come back and again, it has made a lot of headlines. Right. I've made a lot of headlines for people Taking leverage positions. You know, there has a lot of potential, I think, to grow, and it has a huge community. And I think this is what I was saying earlier with some of the altcoins that are seeing momentum, you know, and I think that's kind of where investors should be focusing on. Right. I mean, you know, there's a lot of stories around, you know, how Athena keeps, keeps developing. Yes, it has a lot of, you know, unlocks coming over the next couple of, you know, quarters and years. But again, the funding rates are very low. It has dropped a lot. But I think if we see a little bit of momentum building now in the funding rates, it can actually, like, expand again. I think that's kind of, you know, some of the stories that we are really looking at and some of the, you know, little nuggets here and there that I think are quite, quite interesting. But we are not expecting like a broad altcoin rally simply because the macro forces are just not there. It's just sort of like here where. Where assets have come back because they're sort of like really, you know, sort of like bumped out. And, you know, some themes they seem to be, you know, have sort of run their course. For example, this whole Solana and Solana ecosystem is sort of a little bit done, we think, because of, you know, the meme coin story. But, you know, other things like decentralized exchanges. I think it can come back when the volumes come back.
- [20:07]
Host
Markus, it is always a pleasure having you on Markets Daily. Thank you for taking the time today.