Our very own Antoni Trenchev has become the authority on all things crypto and Bitcoin on Bloomberg Markets: European Open. In light of MassMutual’s $100-million BTC investment, he joined hosts Matt Miller and Anna Edwards once again yesterday to unpick 2020’s institution-led Bitcoin bull run, this week’s price dip as an early Christmas gift, crypto’s regulation and social purpose, and more.
Watch the interview here to stay up to date with the latest industry sentiments:
For a quick summary of Antoni’s key point and the full transcript of the interview, read on:
Christmas came early with Bitcoin’s recent price dip, which provides a great entry point and buying opportunity for investors amid a bull run.
Rumors about last-minute legislation from the Trump administration along with some profit-taking spooked the market over the past week.
These potential regulatory changes in the US would likely comprise more AML and KYC policies, which is a bullish sign for cryptocurrencies.
Bitcoin reaching $50,000 remains a reasonable target, to be met as early as the first half of 2021.
Nexo has seen an influx of institutional investors, family offices, and high-net-worth individuals, signaling that this bull run is fundamentally more sound than the retail-driven 2017-2018 rally.
The social purpose of BTC is to defend us from unpleasant macroeconomic realities as a store of value amid the flood of cheap money and expensive monetary policies.
As Antoni mentioned, Christmas came early for investors, be it through the overall rising value of crypto, or in the form of a timely buying opportunity. We’re thrilled to bring you such positive news from our industry and wish you the best in your pre-holiday investment.
Now the Bitcoin club is getting bigger. MassMutual is the latest member to join, buying a $100 million for its general investment fund. The digital currency has surged more than 270 percent since March, hitting an all-time high last month. It looked like it was on course to reach 20,000 dollars but it’s been down every single day this week. Joining us now is Antoni Trenchev, Co-founder and Managing Partner of Nexo. Antoni, I got to ask first about the price action. 20,000 dollars, a big round number, looks like а ceiling it's bounced off of a couple of times. What do you think about that?
Matt, Anna, Christmas came early this year. Bitcoin is giving you a great entry point for you to purchase Bitcoin just before lift-off.
So you think this is just another buying opportunity and I know in the past on this program you forecasted Bitcoin to rise to 50,000 dollars. We’ve seen a lot of reasons why people would want to get in. The PayPal news to me is the biggest. What do you think the next impetus is going to be, the next big news for Bitcoin will be?
Well, first of all, there has been some rumour about last-minute legislation from the Trump administration. I think that this has spooked the market a little bit and that combined with some profit taking is the reason for this slight correction we’re seeing right now. As soon as the air clears, and I can tell you what these regulatory changes would look like – it’s going to be more anti-money laundering policies, more know-your-customers (KYC) policies just like in the banking sector, and ultimately this is going to be a very bullish sign for Bitcoin and that will set the stage for the next leg up. As you pointed out, I made a prediction about $50,000 by the end of the year – at least nobody lost money who followed my advice – but I do think that this is a reasonable price target even for Q1 or Q2 of next year.
So maybe it’s the regulatory threat taking the edge off right now, Antoni. What about the retail investor? We’ve got a story this morning on Bloomberg – talks about how wealthy family offices are increasingly getting involved with Bitcoin. But what about the retail investor, because I know that that is something that you watch out for and in 2017, retail euphoria was something that was maybe blamed for Bitcoin getting a bit too expensive?
Yes. Well, this is a very different rally and we see this on the Nexo platform because we have 360 degrees of the market, so to speak. Right now, since the summer we’ve seen institutional investors, we’ve seen high-net-worth individuals, and family offices positioning themselves and purchasing Bitcoin and other crypto, which is very different from what we had in 2017 and 2018 where this was a really retail-driven frenzy, where everybody was maxing out on leverage and credit to buy Bitcoin. This has not yet happened. Some of the retail has come in but nowhere near what we saw in 2017-2018 and this is usually the sign you’re looking for – irrational exuberance – to borrow from Greenspan, and we haven’t seen that, so this rally is fundamentally much more sound.
For me, I know the story that we have on Bloomberg today, it’s one of the most read stories to talk about family offices getting in, for a large part, because they think it’s a convenient store of value. And indeed, you’ve seen a lot of bonds even rotating out of gold and into digital currencies. But for me, it’s really the transactional value of Bitcoin that’s important and I think PayPal moved us closer to that, right? I can now actually buy stuff with Bitcoin on PayPal. Firms like yours arealready helping people to, in a way, finance transactions with Bitcoin as well. When do you think we’ll get closer to really using Bitcoin in a day-to-day way?
Well, the narrative has shifted somewhat from the early days where we were thinking we were going to buy a cup of coffee with Bitcoin. Now it’s more of a store-of-value narrative, that’s why we see the rotation out of gold and into Bitcoin, and who could possibly blame the investors? One dollar invested ten years ago in gold, yields you now $1.70, whereas a decade ago, if you’d put a dollar into Bitcoin, you’re too close to $20 million right now, so that speaks volumes in and of itself. Bitcoin is exactly this – it’s a better version of gold, it’s very easily transferable as you said, it is easily and cheaply stored when compared to gold and this has shifted the narrative. For transactions on a daily basis you would have to utilize something like, sorry to toot our own horn here, but Nexo’s offering where you can pay with your card and keep the crypto asset that secures your loan at the same time, which is the best of both worlds.
So, Antoni, I was going to take us on to this conversation: is store of value the social purpose of Bitcoin? There’s a lot of talk this year in financial markets across all kinds of asset classes, about social purpose, about ЕSG investing and other connected masses. If you had to define the social purpose of Bitcoin, what would you say it is?
It is to defend us from the macroeconomic realities in a situation where just this year due to the COVID crisis we had trillions of new dollars pumped into the system. There’s going to be a race next year and in the years to come for scarce assets, for hard assets, for hard currencies, so I think Bitcoin fits very nice into this narrative. I wouldn’t rule out gold just yet, its ability to persevere is amazing, but this is the social purpose – to store your value in this flood of cheap money and expensive monetary policies.
Antoni, I gotta ask, Ethereum seems to be the one alternative that wealthy investors really prefer to Bitcoin. Is that the main runner-up or the main challenger, you think, to Bitcoin in the world of digital currencies?
It is a very good alternative. Well, I wouldn’t say alternative but a complement to any crypto portfolio, it has performed extremely well, mostly due to the DeFi craze, so to say, of this past year. The thing is that the 2.0 launch of their platform has gotten a little bit like the Brexit situation – at some point you just don’t care anymore and can’t follow it. You just say at some point: just tell me when it’s done and when I can utilize it. But the dev team there is amazing and they are bringing great solutions. So, ETH – definitely a great investment, it’s slightly cheaper on a dollar basis for those that have this psychological barrier of buying Bitcoin when it’s so close to the all-time highs.
Thanks so much, Antoni, really good to speak to you. Antoni Trenchev, thanks for joining us, Co-founder and Managing Partner of Nexo, thanks for coming in this morning.