At the intersection between Asia and Europe’s trading days on November 26, 2020, Nexo Co-founder and Managing Partner Antoni Trenchev joined Bloomberg’s Yousef Gamal El-Din and Manus Cranny to discuss Bitcoin’s rally, sharing his thoughts on what differentiates the 2020 bull run from the boom and bust of 2017, what the involvement of smart money means for smaller managers, and on BTC’s potential for an all-time high by year-end.
Watch the full interview here:
A transcript of the video is available at the end of this article. Here are some of Antoni’s key points:
“It’s been a Bitcoin quarter, it’s been a Bitcoin year, it’s been a Bitcoin decade and we’ll definitely have new all-time highs by the end of this 2020.”
Up to 80% of this rally is due to smart-money institutional investors. There has been a shift from predominantly whales to the Stanley Druckenmiller’s of this world. This provides a much more fundamentally sound basis.
Big-name investors like Paul Tudor Jones created a safe space for smaller managers to talk to their investors in order to get invested in Bitcoin. Now this burden is gone so we see a lot more institutional investors coming in.
The unjust distribution between Bitcoin whales and small investors is also true for the US dollar and the stock market.
The reason why most people don’t get to profit off Bitcoin, in the long run, is that mentality to question Bitcoin every time it moves to the downside.
The digital gold narrative is stronger than ever and if Bitcoin captures just 10% of the total market cap of gold, we would be at $50,000 in no time.
Bitcoin and crypto are the only free markets right now and the only places where the true market forces get to be played out. It contrasts very sharply to the traditional finance sector, so exchanges getting hacked and companies getting bust is to the benefit of all. Being able to fail within blockchain makes it more resistant, even antifragile.
Yousef Gamal El-Din (00:00)
Bitcoins’s run over the last couple of months has been nothing short of spectacular, rising from around $10,000 in September to more than $19,000 earlier this week. Although it’s come off the boil this morning, joining us now is Antoni Trenchev. He’s the Co-founder and Managing Director at Nexo which is the world’s largest crypto lender.
Let me get your initial read then on this big move to the downside and arguably the broader argument that this is not necessarily a very reliable haven given the amount of volatility that's in there.
Antoni Trenchev (00:14)
Well, I beg to differ. Actually, this mentality is the reason why most people don't get to profit off Bitcoin in the long run. When it makes a new all-time high, it's too dear and too expensive. When the market gives you a correction of just 10 percent as a buying opportunity, people say was that it? Is Bitcoin dead? It's been a Bitcoin quarter, it's been a Bitcoin year it's been a Bitcoin decade. And we'll definitely have new all-time highs by the end of 2020.
Manus Cranny (00:46)
Antoni, good morning, it’s Manus. Yes, but we did see some rather unraveling take form in 2017. What's different this year to 2017. What's the crossing of the Rubicon, as Novogratz would say?
Antoni Trenchev (01:01)
It's a very different rally. We see that at Nexo on the platform. We see the whole deal flows the way people borrow, interact with crypto. And let me tell you this: up to 80 percent of this rally is due to smart money institutional investors. Sure the retail is participating also in this latest leg up but it's nowhere near what we saw in 2017-2018 where you had everyone and their grandmother maxing out their credit cards on Coinbase just to get their Bitcoin. It's very very different this time around.
Yousef Gamal El-Din (01:40)
Antoni, you've got Bitcoin whales, though, so 2 percent owned what about 95 percent of Bitcoin. That's an abnormally large slice of the market. And that means that a small number of people get to have a say about which direction the market goes and also means that some of the smaller investors are very, very vulnerable. That's not an indication of a maturing asset class, is it?
Antoni Trenchev (02:03)
Well, this, in just the distribution of wealth, is true for the dollar, is true for the stock market, it's true for Bitcoin. What we have been seeing, however, is a shift from predominantly whales holding Bitcoin to the Stanley Druckenmiller’s of this world quietly accumulating Bitcoin throughout the summer and early spring as well. And right now they're talking their book up. And this gives it a much more fundamentally sound basis from which to perform. And, you know, I am very convinced that we have merely scratched the surface here.
Manus Cranny (02:45)
And Citigroup are with you, they had a rather sort of bullish call up at over three hundred thousand dollars. If PayPal was the moment, PayPal saying “Look, we will use Bitcoin and other digital currencies.” If that was the big moment of 2020, what is the next evolution step? What's the next turnkey to get me up over twenty thousand dollars in the near-term.
Antoni Trenchev (03:08)
Well, the big-name investors like Paul Tudor Jones, they created a safe space, so to speak, for smaller managers who are perhaps afraid to talk to their investors and to their LPs in order to get invested in Bitcoin. Now this burden is gone. So we'll see a lot more institutional investors coming in. Continue to see smart money come in. And then, later on, I think it's fair to say, that the retail is going to go in. And it’s just this perfect momentum of going up. Don't get me started on the macro environment. But the digital gold narrative is stronger than ever. And if Bitcoin just captures like 10 percent of the total market cap of gold we will be at fifty thousand dollars in no time.
Yousef Gamal El-Din (04:01)
Yeah, let's put the price action, the digital sort of currency conversation, aside for a moment and get to some of the crypto exchanges or Bitcoin exchanges. How worried are you that one of the bigger ones could get hacked?
Antoni Trenchev (04:16)
I don't get worried about exchanges getting hacked, companies going bust in the crypto space. I would argue that this is actually to the benefit of all. Bitcoin and crypto are the only free markets that we have right now and the only markets where the true forces of the market get to be played out. And I think it's a good thing. And it contrasts very sharply to what is happening in the traditional sector where you have all kinds of excesses due to interventionalist policies by the central banks, by governments. So being able to fail within blockchain utterly makes it more resistant even antifragile, to borrow from Nassim Taleb here.
Manus Cranny (05:07)
Well, we don’t want to get you started on the macro story today. We’ll bring you back to do that another day. Antoni, I hope your bullishness is rewarded and this is nothing more than a mere temporary correction. Antoni Trenchev Co-founder and Managing Director at Nexo, thank you.