← Markets Outlook
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- [00:00]
A
Let's start on the fact that, yeah, this would actually be a positive for crypto. There's no question about it where the negative comes in. I mean, this is just pouring fuel on an inflation fire. I mean, what causes inflation over here? Oh, maybe tariffs. If not tariffs, let's actually hand everybody cash.
- [00:23]
B
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- [01:11]
A
Hey, how you doing? Thanks for having me on.
- [01:13]
B
I'm doing well. Thank you. Thanks for being with us. Now there's a lot going on and so let's just start here. Talk to me about the current climate for traders. What, what are you watching?
- [01:24]
A
All right, so right now, what am I really looking at? I mean, the, the endless obviously AI squeeze to the upside, which at this point I think everybody's kind of aware that it's, it's a bubble. It's a bubble of some type. Those can go on for a lot longer than anybody anticipated. But when it comes to more of the crypto marketplace, what I'm actually watching right now may surprise a lot of people. I'm looking at gold and its outperformance. I mean, it's just been stellar. For those that have been around for a while, we've termed crypto, you know, like the digital gold. And you just, you have to wonder where it is and why it isn't the player that gold has actually been on a year to date basis. I mean, I can make an argument. All right, you got me. Bitcoin has ripped in the last couple of trading sessions, but it still pales in comparison. Right now it's, it's about half the return on a year to date basis that gold is seeing.
- [02:15]
B
Gold, of course, outperforming the S&P 500. And you just mentioned bitcoin. That is often referred to as digital gold by the industry. Why do you think that we haven't seen bitcoin take off the way that gold has?
- [02:29]
A
Yeah, so one of the primary aspects that's, that's kind of in play right now that I'm not sure that most traders are aware of. So we still have these factions of traders that call themselves. I'm a crypto trader, I'm a currency trader, I'm a futures trader. As I said a moment ago, like, you have to kind of be equal opportunity. And one of the things that we're seeing much more in like the last 18 months, maybe two years is once you start listing crypto on trading applications with stocks, options, futures, and every major trading application. Right now you can literally trade an option, a futures contract, bitcoin, interchangeably, within seconds, the correlation goes skyrocketing, which means we're actually changing the nature, if you will, of how, if you will. Bitcoin trades where it used to be in a degree of autonomy. It's no longer in there. I mean, you're piling bitcoin in right now, but the same traders that are trading what we term high beta stocks, you know, stuff you look like Tesla or Nvidia on a day to day basis, you literally have to lump crypto and specifically bitcoin in with that. And as I said, it's changing the nature of the beast.
- [03:39]
B
Let's talk a little bit about where we are in the US here. The government has been shut down now for a couple of days. Bitcoin recently broke $120,000. Where do you expect to see bitcoin go from here given everything you've told me so far?
- [03:54]
A
Oh, the first thing I would say with the government shutdown is like, see, nobody cares. I mean that's, that's been like our tagline here at Theo Trade for the last couple of days. Nobody cares like the AI trade is going to go on. Granted, it's definitely going to have an impact to some financial stocks and so forth. But back over to, to the crypto side of the marketplace. We see crypto just now kind of catching fire in the last couple of days. But I've definitely got my concerns for a pullback. It was floating in and around this, this 110,000, which I think is a huge demarcation point. You start to break under 110,000 in Bitcoin and it's, it can turn into pandemonium very, very quickly. You know, a fast sell off to 100,000. And I think that's the Point where trade starts to, to literally panic in this marketplace. It's, it's unique in respect to that in bitcoin. You know, there's, there's one door in and there's one door out. It's, it sets itself apart from other asset classes where, for instance, if you're trading The S&P 500, you know, you can buy the spiders, you can buy puts, and there's, there's different ways to mitigate risk. When you start focusing on bitcoin, as I said, there's like one door in and one door out. The derivative side of it hasn't really grown to the liquidity yet. And I get real nervous in situations like this. We see this explosive moves, that pull back to 110. If it happens again, it's going to be real. And again, that's where I think some pandemonium kicks in, drops us even to a hundred thousand to where every trader is going to turn that, that screen back on and be watching it throughout the course of the evening.
- [05:31]
B
All right, let's talk about that scenario for a second. Because we're in October, we're heading towards the end of the year. Historically has been a good time for bitcoin and the rest of the crypto markets, but we might see a quite big pullback come up soon. Based on what you've just said, what do you think makes this end of the year different?
- [05:52]
A
So this is where, you know, I do look at some seasonality, and I do look at the effect of seasonality on the marketplace. But, you know, when a lot of people say, you know, this time is different, this time might be a little bit different. Let's see how long the government shutdown, you know, really kind of grips hold. Because you get three, four weeks into a government shutdown, you're going to have at that point significant turmoil in the S&P 500, which is going to bleed over into crypto. We're not seeing, again, this asset reallocation, like, meaning that nobody's getting out of the S&P 500 and diving into bitcoin. As I said, the correlation is fairly high now between those two. So you come down to that 110 level. And again, I'm really setting aside any seasonality effect. You come down to this 110 level. It's catching everybody's attention. I think we're going to get some precipitous drops, though, in the marketplace. As I said, it's not seeing that, that rotation into crypto like I think we would have all expected, given A government shutdown. Yeah, we've got a bid now we're at, you know, 121 22. But again, this feels more like a squeeze than it does any sustainable rally.
- [07:00]
B
We learned this morning that the President of the United States, Donald Trump, is considering a tariff dividend, which could mean up to $2,000 per person in the United States. The last time we saw something like this was during COVID and it really kind of breathed life into altcoins, into the crypto market. Do you think we could see that?
- [07:21]
A
Okay, so some strong feelings on this one. So let's, let's, let's start on the fact that, yeah, this would actually be a positive for crypto. There's no question about it. Where the negative comes in. I mean, this is just pouring fuel on an inflation fire. I mean, what causes inflation over here? Oh, maybe tariffs, if not tariffs. Let's actually hand everybody cash. I mean, this is helicopter cash. It goes all the way back to like Ben Bernanke time and we'll get into helicopters and throw cash out there. $2,000 in people's pockets at this point is going to re. Spark inflation. It all of a sudden changes the Fed and their outlook. Believe me, Fed is not cutting anything. If they actually believe that the administration is going to be putting capital out on the streets in the near term, I think it's a very much a positive for crypto and altcoins in general. People are going to take that capital and it's going to work its way into accounts. It's going to work its way into that marketplace fairly rapidly. The negative effect of it, though is clear and decisive. It's going to mean higher interest rates. And again, I'm not a huge advocate of the idea at this point in time. Everybody says, why not? It's free money. It's free money to further dilute our currency, fiat currency, and again raise some of the risk. But if you're in crypto, it could be a very good thing.
- [08:39]
B
I'm curious to hear your thoughts on this digital asset Treasury, I guess you could call it a trend that we've seen lately. I was quite surprised that the digital asset treasury formations and the digital asset treasury news haven't really moved altcoins the way I expected them to. Curious to hear your thoughts there.
- [09:00]
A
Yeah. When it comes to sovereignties and digital assets, I mean, this is a long time coming. Does it really change anything again in the altcoin world? Probably not, because this is all about, in my opinion, them actually tracking, you know, capital on a much More grandiose scale. And that's not going to have a dramatic impact, whether it's, you know, bitcoin, which is really, really mainstream right now, or some of the altcoins over there. What you do have to look at though is some of the stable coins and kind of call it into question. This is governments trying to get into the stablecoin business. For the most part. That's, that's the way I actually have the assumption of it. Nevertheless, you go back to the idea of sovereignties offering different digital assets. It's a long time coming. This, this needs to occur because it's, it's, again, it's just a significant improvement. I mean most banks and banking systems, they're running on 20, 25 year old technology right now. I think they should, you know, wake up and come into this generation and start crossing in seconds.
- [10:03]
B
I asked you at the beginning of this interview what you're watching and I want to get a little bit more granular with that question. What are you watching? It could be crypto, it could be crypto related equities, it could be stablecoin infrastructure like you were just kind of alluding to there. What are the assets that you have your eyes on right now?
- [10:21]
A
Probably the biggest thing is as again this correlation between specifically Bitcoin and some of the higher beta stocks, everything from stocks like energy stocks like Oklo, all the way back over to Nvidia Broadcom. And what we're actually seeing right now is the order flow relationship. And what that basically means is so I worked inside of the brokerage industry for 15 years and I still track order flow. That is, what are retail clients, do you know, that are on some of these platforms that are extraordinarily well known. And the interesting aspect of it right now is the same people that are trading bitcoin are the ones trading oklo. The same people that are trading bitcoin are buying calls every morning when the bell goes off in something like Broadcom or Tesla and Nvidia. And it's absolutely fascinating to me because this, then it kind of transcends. It's like bitcoin, as I said, is no longer this autonomous asset class. It has been pulled in, if you will, to the s and P500. And although we've discussed this in the past, it's never been more real than effectively right now. So when we do start to see some, some volatility in the s and P500 and there's been a lack thereof, right now you're going to see some extreme volatility ripple back over to Bitcoin and vice versa.
- [11:38]
B
All right, we'll keep watching that closely here at CoinDesk, and hopefully you can come back on again soon and continue to unpack both the macro narrative and some of the trades that you are watching closely. Don, thanks so much for joining me.
- [11:50]
A
Thanks for having me.