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- [00:00]
Ryan Reynolds
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Ryan Reynolds
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- [01:19]
Patrick Lu
Week ago, bitcoin registered its highest weekly close ever at 110,000. But you know, the market sentiment doesn't really feel all that euphoric. I think part of it is bitcoin has failed to materially break out since about six months ago.
- [01:42]
Ryan Reynolds
Bitcoin finished the month of May at its highest monthly close, around $104,000. But despite this, market euphoria has been subdued. Are markets just maturing? Are they reacting to trade wars or is it something else altogether? Joining us now for his thoughts is Gemini Head of Markets, Patrick Lu. Patrick, welcome to Markets Daily.
- [02:03]
Patrick Lu
Thanks for having me, Jen.
- [02:05]
Ryan Reynolds
Of course. Now let's just talk about what's happening in the markets this morning. You know, just recently we were riding new all time highs, but now sentiment is not feeling like it once did. What are you watching? How are you making sense of what's going on in the markets?
- [02:22]
Patrick Lu
It's interesting. You mentioned thing about sentiment, right? Like bitcoin just recorded its highest monthly close ever last night or two nights ago, about 104,000. And just a week ago bitcoin registered its highest weekly close ever at 110,000. But the market sentiment doesn't really feel all that euphoric. I think Part of it is bitcoin has failed to materially break out since about six months ago. Call it three or four weeks after the election. So I think given, you know, the range bound trading action, we dipped below 80,000 with Liberation Day happening April 8. There hasn't been quite that euphoria that we've seen in the markets and people aren't rejoicing over price per se, but overall, like if you kind of zoom out right, like, like bitcoin price has appreciated over time. We kind of registered a couple key milestones even in the past, past week or so. This morning, kind of waking up with the headlines over the weekend, some renewed tensions over tariffs. We obviously had the U S. China summit in Geneva two weeks ago. Representatives from both sides kind of negotiating there and, and things. People who kind of came away feeling pretty good about things. And you saw broad relief, rally and risk. Kind of the, the most extreme scenarios of the trade war escalating, getting priced out. As with any negotiation, I think you're kind of seeing a little bit of seesaw back and forth once again. There's some accusations being thrown around of, you know, China kind of not violating the recent trade truce that was struck with Washington. China has denied that. And so, you know, there's I guess a little bit heightened rhetoric once again of just both sides trying to make sure we're back on the right track.
- [04:30]
Ryan Reynolds
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- [05:54]
Patrick Lu
Yeah, absolutely. Whether you know, whether it's taco or call it something else, I think the key things to keep it simple is is there a re escalation of the numbers being thrown around when it comes to tariffs. Like we've kind of already set what people perceive to be the bounds to be pretty extreme. Right. Like 145 on China. So seeing those numbers and where they are within the range, I think will dictate how the market reacts. If we get number more extreme, 200%, 250%, then it's probably going to be pretty bad for markets right now. I think it's, you know, kind of adjusting the within the range a little bit. That's why you're seeing the market not react as poorly and with a lot of kind of back and forth headlines. And then the other thing is really like from like a macroeconomic level, how does these tariffs feed into inflation numbers? So yesterday we had one of the Fed officials talk about, you know, 10% tariffs isn't necessarily going to get inflation up to that 3% number, which of course, you know, always kind of the, the lead into that or, or the follow through action on that is potential rate hikes which could really roil global markets.
- [07:25]
Ryan Reynolds
Well, tell me a little bit more about that. I mean when we're looking at potential rate hikes or potential rate cuts, what are you expecting for the rest of the year?
- [07:33]
Patrick Lu
So if things kind of stay relatively calm and contained, I think the rates now is probably higher than, than it needs to be. Right. So as long as you know, we have stable growth and you don't see upshoots inflation numbers, there's probably room for, for rates to come down. Obviously I think the administration has been, has been vocal in their thoughts about rates having to come down. I think the Fed is taking more of a wait and see approach. So yeah, I think it'll be interesting to see lots of I guess uncertainty on both sides. But if I were to lean one way or the other, I think rates come down, we get a little bit more easing conditions for macro policy.
- [08:29]
Ryan Reynolds
You mentioned just a few minutes ago that bitcoin hasn't broken out for the better part of half a year. What do you think it's going to take for that next bitcoin breakout? And is the lack of a breakout maybe a signal of an asset that is just becoming A little bit more mature than we're used to.
- [08:46]
Patrick Lu
On the fundamental side, what it takes for a breakout, which I think is what we're. We've already seen, is kind of fundamental drivers of inflows into Bitcoin. So one of the things that we've been focused on at Gemini as like a, you know, vertical that we want to partner with folks on is the corporate treasury segment, right? Like what started out as, you know, Micro Sailor and MicroStrategy, just kind of, kind of going with this maybe idea or business strategy that's a little bit out there and allocating their treasury and profits into Bitcoin has really caught on. And we've really felt that across client segments from, you know, real estate companies, consumer companies, consumer tech companies, hospitality companies, and across the globe. And this is just the corporates. And then you extend that to nation states. Like recently we saw Arizona and New Hampshire kind of be the first two US States to have a bitcoin strategic reserve. I think Texas and Ohio could be right behind that. And then on a national level, you know, center of Lummis kind of reintroducing or bringing up the Bitcoin act, saying that President Trump is supportive of it. So all these things are kind of ways that we just get people to adopt Bitcoin standard, which ultimately is the most fundamental catalyst to drive price action.
- [10:22]
Ryan Reynolds
Tell me a little bit more about the conversations you're having around bitcoin treasuries. Because like you said, when it was just strategy, when it was just Michael Saylor folks were looking at Saylor thinking like, wow, this is kind of an insane strategy. It's obviously become a little bit more mainstream with governments like the United States and Pakistan looking at. Looking at Treasuries for themselves and companies like you mentioned all over the world looking at their own bitcoin treasury strategy. What's driving that? Is it a little bit of FOMO on the corporate side looking at companies like strategy, the amount of bitcoin it's gained, Is it. Is it seeing governments get into it, like, what is making companies that maybe never looked at crypto before look at something like this?
- [11:07]
Patrick Lu
I think the FOMO part would, I guess, would be, like, how much, like, stock prices are trading over their net asset value and there is a premium there, don't get me wrong. But I think what's really driving it is just like some of the fundamental ethos and the narrative for bitcoin, right? Fiat, the basement Bitcoin is a fixed supply. Only 21 million could ever be printed over time. And from that perspective, I think that's really catching on for corporates. We were sitting down at a dinner with Michael Saylor and one of the, one of his pitches or narratives that he explains is basically you have all these companies that kind of dominate their individual industries and almost have monopolistic control over them. So the Amazons, the Googles, the apples of the world, just dominant market share. Right. And if you're kind of anywhere else on that spectrum, you need a bitcoin strategy to, to really be successful and sustained over time.
- [12:23]
Ryan Reynolds
All right, and just before we wrap up, Patrick, I know we've talked about a bunch of different narratives, trends, themes, but if you were to pick one to watch for the second half of the year here, what is that? What are you watching closely?
- [12:39]
Patrick Lu
Yeah, so I think aside from kind of how the corporate treasury strategy develops additional action from, like, legislation, whether it's at the national level in D.C. or at the state levels. So at the national level, we talked about the Bitcoin Act. I think last week, you know, crypto czar David Sachs was on stage with Gemini's founders, Cameron and Tyler Winklevoss, reiterating that the bitcoin strategic reserve at the national level permits the buying of bitcoin as long as the bitcoins are acquired at using a budget neutral manner. So one way I think of it, sell gold reserves, buy bitcoin. Right. Like, if that happens, we're off to the races. At the, at the state level, it's really kind of continuing to see different states adopt the bitcoin strategic reserve and getting legislators across the aisle at the state Senate levels on both sides to buy into this.
- [13:54]
Ryan Reynolds
All things that we are watching closely here at CoinDesk. Thanks so much for joining Markets Daily today and providing that insight. I'm sure we'll chat again soon.