NFA Live! What is Bitcoin Doing? transcript

Hey everyone and thanks for dropping back into the crypto verse. We are here with another episode of NFA live. Uh as al- as always it's a pleasure to be joined by both Guy from Coin Bureau. How's it going, Guy? >> I'm good, thanks, Ben. How are you? >> Doing great and Rob from Digital Asset News. How's it going, Rob? >> Good, good, good. Everything is good in the markets. >> Did you get a haircut, Rob? >> Yeah, I tried to emulate you with your nice buzz cut.

I didn't want to go with the full route of >> Guy. Oh, I can't go the full route of Guy. >> [laughter] >> Uh >> This is This is a hard look to achieve. A lot of work goes into this. >> Yeah, and no work goes into mine. >> [laughter] >> Um anyways, uh let's go ahead and and and and jump in. By the way, if you guys are not subscribed to Rob and Guy, make sure you do so. Links in the description below. And we're just going to talk about a few different things.

Um the first question, and I'll start with you, Guy, cuz I know you've been pretty adamant that you thought the low was in for a while. Uh so, with Bitcoin breaking uh the May high, it certainly caught me off guard. And I'm curious um what are your thoughts about about this rally? Like, have you been sort of It seems like you probably more so been expecting it. What are you What are your thoughts about what's going on right now with Bitcoin? >> Well, it did the rally sort of did take me a little bit by surprise because you know a- as as has been said many many times, everything else going on related to the economy is is on the face of it such bad news, you know, rising rates and oil sort of oil crisis that seems to kind of fluctuate um between you know, very serious and just plain serious.

Um the you know, the ongoing kind of concerns around AI and what have you. And yet yeah, you know, and and bond yields as well, you know, which is perhaps the biggest one. Um, you know, these rising Treasury yields that uh are just really sort of supposed to be toxic for waste for for risk assets really. So, um it it it did surprise me to an extent, but I mean, I kind of think my reasons for thinking that the the bottom was in were mainly based around momentum because I think you know, crypto crypto is so uh you know, really does take its cue from you know, rising prices takes its cue from rising prices.

Bitcoin is a real momentum asset. And I think once that momentum seemed to kick in, it's just seemed to me harder to imagine that we would that we would revisit those lows. Um, I mean, it was still definitely possible, but it just felt like like Bitcoin had more momentum. I think in previous bear markets, um flipping the the 50-week moving average has signaled the end and you know, again, I think that's happened this time around.

Um, and it's not just we we also have this useful metric, if you like, this useful proxy of the ETFs which have started seeing sustained inflows again, which suggests that there is spot demand. This isn't just uh you know, shorts getting getting wiped out. This isn't all leverage. So, uh there is a kind of healthy spot demand for it and I think it's been kind of helped the whole rally has been helped in a way by the fact that although Bitcoin has performed reasonably well, you've also had a handful, I mean, in the last couple of weeks or so, altcoins in general have been doing well, but I think you also have standouts like Zcash and hyperliquid and things like this that have really sort of caught a bid and sustained not just not just momentum, I think, but also kind of sentiment.

You know, they've helped really sort of get people pulled up and and and excited again. Um, and I guess really I think you know, the last thing to consider is going back to all those all those bits of bad news supposedly bad news that I was talking about at the beginning. The fact that the market the markets just shrugged all this off, I think is is really really interesting but suggests to me that there is enough momentum to to sustain us for a while. >> Yeah, no I mean it's I I I'm surprised honestly.

I thought I thought rising bond rising yields would have more of an effect. Yeah. So Rob, what are your thoughts here? I mean what what do you see Bitcoin doing here? >> I think um you know, going going back into it. Um Bitcoin itself has done you know, pretty well over time and I know Guy talked about well, you know, there's there's a lot of a lot of momentum. It's a funny thing because like like with in our market it seems like it's mostly it's a it's a good amount of speculation with a little bit of utility.

And I and I can see it kind of you know, playing out like that. But but the the thesis of why Bitcoin is supposed to go is supposed to go up is because it's supposed to go up because of economic uncertainty or the uncertainty in socioeconomics for like the wars. So I remember back in uh February and there was a nice little invasion from Russia and Ukraine. And of course that's that kicked off the massive bear market.

Again, four-year cycle is kind of goes into that. So you have that part and then we just had another war start up. I know we can't officially call it a war but whatever. Iran in February 2026 four years later. It's like we're in the matrix. And that was supposed to be well, because you know, you buy the invasion and you know, Bitcoin was around 67k cuz it was a towards the end of end of the the end of the month and then it rallied up to 82k and then we dropped all the way down to 58k in June.

So you have to ask yourself, well, if it's supposed to go up because of those but it didn't, you know, what is actually going on behind that? And then we can take a look at inflation. And we can take a look at, you know, personal consumption expenditures, a PCE. And we can see that in October cuz Bitcoin is supposed to go up as inflation goes up, right? That's what everybody talks about. But you take a look at October, the PCE rate was actually pretty low.

And now we've been going up for quite some time since October, which was the high of Bitcoin. And we've gone up and what has it done? Well, it actually has has gone down. Now we just had a nice little rally and that is fantastic and I am really happy with that. I personally would like to see it go a little bit lower. I still think we can go lower in Q4. You know, it's not a very popular opinion, but along the way I am not a genius.

So I have to dollar cost average, which I've been doing every single Monday. And as the price goes down, I use this little tool, it's called the risk assessment. It's on Ben's website. I don't know if you guys have access to that, you check it out. But as the risk goes down, I actually double up. If it goes down even more, I quadruple up. And it goes way down, I 8x up. And that's the the thesis. So the hedge is I think it's going to go down.

But I still got to dollar cost average because over time, I think that'll play out pretty well. So that's I still see Bitcoin going up. I still know if we're going to see a Q4 massacre and what what Guy talked about in the background or if we just keep going up from here. >> Hey Guy, what are your thoughts about Q4? Cuz you know, if you think about we we've had this four-year cycle for Bitcoin in the past and I mean I I would argue that the four-year cycle kind of shows you around the time where Bitcoin should bottom.

Normally it's in the midterm year, right? You get these sort of larger drawdowns. In my experience, right? Every prior midterm year I've seen Bitcoin get wrecked in Q4. And so, is this time different, right? Like, uh should we think that this time is different? Could we see any weakness in Q4? And maybe that weakness doesn't have to yield a lower low. Maybe it just yields, say like, uh a macro higher low that it then builds off of.

What are your thoughts, Guy, about about going into into Q4? Cuz I I I always think back to like, you know, 2022 and 2018. And you know, I remember thinking like, all right, we're good. And then in Q4 like, something happened. >> Yeah. >> The last one it was uh FTX. And and I think the thing about FTX was we dropped only like 15, 20% when that happened. So, like, if we did that again, it wouldn't even yield a new low.

It would just be a higher low. Um So, so what are your thoughts going into into Q4? >> Well, look, I mean, you know, going into Q4 last year, of course, we got the 10th of October, you know. So, um yeah, I mean, this this being crypto, there is always there is always a potential uh grenade waiting to go off. I mean, I think, you know, you just have to you just have to factor that into your into your risk calculations, into your risk assessment.

Um and to say like, look, you know, okay, we thought that um post FTX exchanges were a lot safer uh than than they were back then. And and in fact, they are, you know, most exchanges, for example, are, you know, they they are a lot more secure. They are um you know, they most of them publish proof of reserves. They they are over collateralized, etc. But of course, as we found out last October, it's not just a you know, there's always something else.

In this case, it was, you know, exchanges were involved, but really it was the fact that a whole lot of leverage had had built up. And then it, you know, the rug got kind of pulled by um by Donald Trump announcing these uh tariffs on China. Uh which I see have just been um the the moratorium on them has just been extended for another 2 months. You know, cuz I mean this is still very much a live issue. And I guess, you know, we're in this kind of weird situation where, you know, we've got there's a very there's a very erratic president who, you know, could say or do anything at any given time.

Um which is what happened last October. And so, yeah, I think we have to we have to accept that it can that it can happen. The unexpected can occur. I'm, you know, I kind of feel, again going back to the idea of momentum, I kind of feel that going into Q4 now, the momentum does look good. The sentiment has picked up. And there is a kind of renewed positivity around crypto that we haven't seen for a long, long time. And it is amazing because not so long ago, we were on this on this stream saying how crypto sentiment was as bad as we'd ever seen it.

And it just showed I mean that that, I guess, kind of illustrates my point in a way. These things can turn so fast. So, can we rule out that it'll turn the other way? No. Um I'm going to be I I'm choosing to be cautiously bullish because, as I say, I think sentiment has picked up. And I think crypto is in a better position now. I'm hoping that we've learned the lessons of of the 10th of October last year. And I kind of feel that there are more sort of useful projects.

There's a lot more focus on buying, you know, crypto businesses that actually that actually make money. Um I feel that the speculation is get is being is being more intelligently allocated. Um but, yeah, you know, if you've been in this space for a while, you know that >> [laughter] >> there's something could always crop up to to spoil the party. >> Yeah, I will see. Rob, did you want to add anything? You kind of already touched on it a little bit.

Um >> Nope, that was great. Great answer, guy. >> Next question. >> that's why that's why DCA, Rob, you know, you're DCA strategy is is is is the way to go, I guess, because like, you know, that means you're you're you're expanding it out over time, and that's those those kind of risks, those kind of you know, very crypto-specific eccentric risks are are kind of why you buy at a regular regular point every every week rather than trying to time it. >> Yeah, it's it's worked out pretty well over 6 months.

We'll see how it continues to play out as time goes on. >> Yeah, I mean, I think that's usually the best strategy, right? Rather than trying to time stuff too much. The Fed raising rates right into a supply shock. What do you guys think about that? Cuz yields yields are still moving higher. And you know, I mean, theoretically, if if you know, if under many times when yields go up, it hurts long-duration assets the most.

Bitcoin has has clearly kind of gone against that. So, what are you guys' thoughts here about what the Fed's doing? I know Rob's favorite topic is talking about the Fed. >> [laughter] >> But either of you guys can take it. I mean, what do you guys think here about what they're doing? Like raising rates into the supply shock, but when we do have legitimate inflationary pressures that are occurring now? I mean, you know, energy energy prices are up.

We just saw diesel has what? New highs essentially. Higher than it's ever been, I believe. Like, what are you guys' thoughts about that? Is is the Fed making a mistake or are they behind where they should be? Any of you either of you guys can take that. >> I'll >> I'll take it and then >> Rob. >> I'll take it and then Guy can clean up my mess. So, if we take a look at the federal funds rate, as a reminder, let's when in doubt, zoom out, right?

Just remember that since the the mid-1980s, the Fed funds rate, you take a look at the S&P 500, as always, it goes down sometimes a little bit, sometimes a little bit more, but but over time, you can see the trajectory of the S&P 500 where it goes. And And red is the Fed the federal funds rate. I mean, look at these Look at these rates. I mean, for quite some time. And you just had to just shrug off This isn't a traditional market.

Just shrug it off and keep going in. Now, of course, we Actually, we dropped a little bit, and then off to the moon we go. So, how What does that mean for, say, like, Bitcoin? Well, Bitcoin has actually done pretty good when we actually raise rates. So, take a look at this. Let me refresh this. And actually, I think it was in 2017. Apply. There we go. Take a look at this. I always found it interesting that as the rates go up, Bitcoin did pretty well and kept going.

I'm actually 1 2 3 4 and 5 when it hit it all its all-time high in 2017 when I got in. So, I know people will say, well, when when the Fed raises rates, that's bad for for Bitcoin. Well, it could be as we kind of fall along in the on the midterm four-year cycles. And then, of course, the next five goes down. And over here, we had this thing called coronavirus. I'm sure you all remember that. And then, over here, the exact opposite, 2022.

We raised rates, it goes down. And why? Cuz we're in the midterm here. Then, around the around the fifth one, we started we kept raising rates. And what does Bitcoin do? Rallies against it. So, like, as these things come out, yeah, it makes a lot of sense. And I don't I think the Fed is a little bit behind, especially with I mean, with their with their new Fed Fed chair, but they did the right thing by raising rates.

I know people will say, well, they shouldn't have done that in a supply shock because these are the things that happened. And like Guy talked about, we can reverse this quickly. Everything can turn to a quick 180. All they have to do is get the hell out of Iran. But, we'll see if that actually happens. And let's see if that the whole thesis kind of plays out with them having a nuclear warhead. But I'll just remind everybody, I was around and I was in service when we went into Iraq and Afghanistan.

Not to be political, sorry. But weapons of mass destruction were not found. And now here we are with we have to get rid of this these nuclear warheads. Okay. So let's just keep going with that. We'll see how it all plays, but if we could get out of it, I think things would be super bullish and we'll go from there. Yeah, that's where I see with the with the federal funds rate. They're probably going to they're probably going to raise again this year.

Uh maybe maybe one more time. I think that's what's uh been priced in. And then next year probably a couple more. >> I think uh yeah, I I think the market was even I mean as it stands right now, the market thinks there's you know, almost a coin flip that they might actually raise two more times this year. >> Yeah. >> And then interesting. >> Yeah, and then Brooke when the last of a guy type takes it and cleans this up.

But the one thing that concerns me is that we take a look at the 10 and 3. Every time it inverts, we have a recession. And we've been seeing this across the across the continuum, but the one that didn't happen was one of the biggest ones over here. We inverted fully missed the recession somehow. And we came out, but I think this actually happened in '98, but then we eventually hit it in the dot-com crash. So these are the things that I think about that concern me, especially with the AI things that are going on, but I mean again, it'll all play out at some point. >> Guy, what do you think?

I mean is uh you think the Fed's doing the right thing? >> Yeah, I think, you know, it it they can't they they can't print oil or diesel for that matter. So all they can really do, uh you know, when faced with the specter of inflation, which let's remind ourselves is by far the most devastating force, you know, economic force out there. If inflation gets out of control, it's it's bad news across the board. And so, I do think that, you know, it they are right to kind of focus on this.

And Kevin Warsh said at his press conference, didn't he, that he, you know, with with employment basically okay, and, you know, the labor market holding up, that means that they are free to focus on inflation. But all they can do, as I say, they can't print oil or diesel, you know, they can only slow down the demand side of of that equation. And there is an awful lot feeding into uh feeding into inflation, feeding into that demand, you know, not only the the uh the the oil situation uh with the Middle East, but also the data center build-out, all this demand for chips, you know, all of this stuff is feeding into inflation.

And so, I feel that, you know, the Fed has fairly, you know, fairly limited arsenal, you know, a fairly limited set of tools at its disposal. All it can do is try and manage demand. And I think that's what it is you know, they are trying to do. And they may well feel that further rate hikes are necessary to try and tamp that demand down. Um but that's, you know, that's really all that they can all that they can do at this point.

Um and if it is ultimately to keep inflation under control, then it is probably, you know, I'm I'm no expert economist, but it is probably the best thing that they can do long-term. People scream at them, don't they? I mean, you've got Donald Trump screaming for 1% uh interest rates. Um you know, from the from the man that he appointed. Um but, you know, it's it it's if inflation gets out of control, it is it is catastrophic.

So, this is what they have to do. >> Yeah. No, I mean I think you're right. I mean I if anything, I feel like they should be raising rates quicker. Uh because I if you look at I was looking at if if you look at uh yields right now, like do you guys think the bond vigilantes are going to revolt? I mean or continue to revolt because the the 30-year yield is now at 5.4 and the 10-year is at 5.1. Um >> Yeah. >> The yields are going up.

I mean you could you could argue they're not raising rates fast enough. Are you guys Do you guys think they should step it up or do you think kind of like these slower 25 basis point increments are are actually kind of what makes more sense? >> I think probably the smaller increments are easier for the market to digest. I I kind of feel that, you know, that's what that's what we've now been conditioned to expect. And if they were to turn around at the next meeting, which I I can't remember if it's November or December. >> Uh >> Oh, it is Oh, there is one next month, is there?

Okay. The next meeting in October. If they were to turn around and hike 50 basis points, I think the market really would throw its toys out of the pram. So, I think they are kind of locked in to those smaller, more incremental hikes. But um yeah, you know, it it it it would it would make sense, I think, given given all these other pressures that are going on. >> Yeah, I mean I wonder when they when the long I was a lot of people have looked at like yields and they think that it's crazy that the long end is going up, but if you look at the average 10-year for like the last several decades, the average over the last several decades is still higher than it is now.

Um it's just that we didn't you know, we haven't seen those levels in a while, so then it feels like it feels like the economy can't ever handle that. But then it's like for decades we were at much higher rates and the economy was fine. It's just what what was abnormal was spending what like 7 years at zero, right? When when rates were basically zero. That was more abnormal. A 10-year a 10-year at five or even six or 7%.

That would be more representative of normal times than than what we've seen the last uh 7 years or so. So, I think that's kind of an interesting part of it that a a lot of people are having a harder time accepting. Um do you guys think altcoins will will continue to sort of surge here against Bitcoin? There's there was a few that I I know that people were uh looking at, you know, the privacy coins, some other ones have done well.

What do you guys make of what's going on over there? Rob? >> Well, I think there's always going to be a narrative and I think this narrative is payments and tokenization of real-world assets and perps. So, that's why you see like uh HyperLiquid do so well and then also about the 24/7 trading which the SEC just did like uh um conditional uh What was it? Uh conditional improvement where they would allow this to actually happen on specific rails of cryptocurrency.

That's why you see stuff like Uniswap uh you know, go up and HyperLiquid go up. So, you see something like that, but again, I I think another thing will be tokenization real-world assets and you got to take a look at Ondo for that. You got to look at Canton for that. You got to look at, you know, where the big institutions are throwing their money around too and seems like those are some of the winners, but there's a lot of I think there's going to be more winners, but there's going to be a lot lot lot lot more collapses.

And those are the ones that have to collapse so we can take that liquidity and put those into, you know, like Guy said, uh projects that actually make money. So, that would be So, it's going to be some winners, but you got to under- it's going to be tough to to call uh the exact ones. >> What do you think, Guy? >> Yeah, I think this being crypto, you know, crypto capital is always going to try chase a higher return somewhere because you know, virtually every crypto investor who's you know, who who's been around for a while will have a stack of Bitcoin that they will be they will be sitting on but they will be dabbling for you know, in some much higher risk higher reward stuff elsewhere.

And as I said earlier and as Rob alluded to as well, I think just now it's like fortunately for for for all coin speculators there are now a number of projects that they can they can bet on, you know, that they can speculate on but that aren't just like, you know, governance tokens or whatever like this. You know, you've got projects making real money. Hyperliquid makes real money and it but it buys back and burns the hype token with it, okay?

You know, those those buybacks and burns I think may be slowing down and of course there are team unlocks to come but you know, that is still that has so far been a proven way to drive value to token holders. You know, Uniswap is is is doing kind of is is starting to do similar things as well, you know, so there is a realization that you can't just you can't just issue a high high FDV low float that's been you know, that's been hoovered up by VCs, you know, that method fortunately is dead and then call it a governance token and pretend that people are going to have some sort of say over how the protocol is run.

You know, fortunately we've we've moved past that I mean there'll be you know, there'll be a new flavor of for us all to digest in time but you know, I I I do feel that as far as all coins go, we are in a way better position than we have been for a while because these are these are businesses that make money and that's that's great. >> [laughter] >> That's quite rare in crypto. >> Hopefully it's different than the meme coin stuff from last cycle. >> Yeah, I nothing more than they move away from that. >> I mean, meme coins are, you know, this is one of the things that, you know, meme coins are enduring, you know, they're the turd that won't flush.

And, you know, there are there are kind of all kinds of experiments going on now, you know, various meme coins that you buy them and then they use some of the fees from the from those buys to buy like, you know, non-shit coins or whatever like that. You know, there's there's all kind there's always going to be some new experiment. And of course, you know, we had Robinhood chain launch recently and that gave us a whole new meme ecosystem and whatever.

And, you know, so much of crypto now uh is is is much younger people. I mean, look at for instance, um look at Fred guy, you know, who is I think is I think is really good. Like, this is a guy who knows a lot about the markets, who knows a lot about how crypto works, a really good understanding of it. And, he's going live on on Twitter every single day. But, I think he's a really good kind of spokesman for this whole sort of generation of crypto people who are like, "I don't care that it's a meme.

You know, I'm going to hold this I'm going to hold this for for 2 and 1/2 minutes and then I'm going to rotate into some other shit." But, you know, this is this is the new paradigm and and memes, you know, they they do play a part in that. But, for us uncs, you know, for us older, you know, more boring people, there are still some cool altcoins that you can buy that aren't, you know, that aren't just speculative nonsense anymore. >> Yeah. >> Yeah, that's true. >> Um well, uh we'll see what happens in Q4.

Um I as always remain a little skeptical, but here we are. Uh at at 84K, so um Uh anyways, yeah, we'll see what happens. Uh and thank you guys for being here. Uh if you guys aren't subscribed to Guy and Rob, make sure you guys do so. Link's in the description below. And, I guess we'll be next week here on Rob's channel. >> Sounds good. All right. >> We'll see you guys. >> Cheers, guys.