A Chat With Dave Weisberger: Why Bitcoin Entered A “Perfect Storm”
31 Outubro 2023 - 10:00PM
NEWSBTC
The price of Bitcoin might be losing bullish momentum in the short
term, but on higher timeframes, the cryptocurrency is likely to
extend its current rally. At least, this is part of what we spoke
with Dave Weisberger, co-founder and co-CEO at CoinRoutes, a
liquidity and algorithmic trading tool provider for the crypto
market. Related Reading: Trader Who Bought Dogecoin In 2017 Maps
Out Meteoric 37500% Rise To $26 As of this writing, Bitcoin trades
at $34,200 with a 2% loss in the last 24 hours. As the bullish
momentum seems to fade, some analysts expect BTC to return to the
critical support area of around $33,000. This area must hold if BTC
bulls want to prevent a more extensive correction. Bitcoin Becoming
Digital Gold, Low Selling, And The Potential For 20x Profits On the
back of the current macroeconomic landscape, Bitcoin has become
more relevant as a global financial asset, a store-of-value, and
“gold 2.0,” according to CoinRoutes’ co-founder. Weisberger has
been sharing his bullish thesis on cryptocurrency and the impact of
the spot market on the current rally. During our conversation, we
spoke about the Israel conflict, the current market structure, and
the reasons brewing a perfect storm for BTC. This is what he told
us: Q: With a delicate situation in Israel, high inflation, and
talks about a potential economic recession, How is the current
macroeconomic landscape impacting the Bitcoin price? A: I think
that the easiest way to look at it is to understand the famous
quote from Ram Emanuel when you’re in the government, never let a
good emergency go to waste. The fact is I don’t believe the Federal
Reserve and the treasury have a whole lot of choice anymore.
There’s really only one way out of the current macro environment in
a real sense. They effectively have two choices. Door number one is
to deregulate like crazy, cut taxes like crazy and hope to grow
your way out of it. Choice number two is choose the Japanese
approach, which is to manage the yield curve to allow the
government to continue to function and kick the can down the road
so it’s somebody else’s problem later. I actually, I think that
there are a couple of candidates that talk about doing door number
one, but none of them are in power and none of them are likely to
win. And even if they did win, they’re unlikely to have the
congressional support to do the massive amount of deregulation it
would take to lean into AI and digital assets and all the new
technologies that will allow for a growth rate to be able to grow
tax receipts while cutting spending on government programs and
government bureaucracy. That seems highly, highly, highly unlikely.
It’s what I would do, but I don’t think it’s going to be done. So
then you’re stuck in a situation where you have a current
administration that is continuing to add spending. James Lavish
quotes, I think $1.6 trillion in new debt. It’s a $2 trillion
yearly deficit. At the same time that debt service is approaching a
trillion dollars and that’s at sub 5%. What happens if we get a
normal yield curve with a 2% upward slope to 7% at that point, debt
service would literally be debt service plus even a cut defense
department would literally be the entire amount of tax receipts. So
if you think about that, there is no escaping the debt spiral that
we’re in. The fact is all roads lead to monetary debasement. Now
whether rates are high or low, that’s an interesting question.
Maybe they’ll keep short rates high to try to put the genie back in
the bottle. But the fact is the Bitcoin prices is responsive to the
overall amount of money, monetary aggregates and debt. And Bitcoin
is quite literally growing into digital gold. And digital gold. If
you look at the monetary aggregates or monetary value of gold would
imply a Bitcoin price. That’s 15 to 20 times where it currently is.
So when you look at Bitcoin at 34,000, it’s like, okay, it’s well
bid there and we’ve seen it over the last few days. When Larry Fink
started making this case a few months ago, a couple months ago, it
triggered a massive rally. Well now we have Mohamed El-Erian making
this case one of the most widely respected bond analysts and just
yesterday, Stanley Druckenmiller making this case. So you’re
starting to get a shift in the opinion leaders of the economy to
say this (BTC) is a hedge against a looming fiscal disaster debt
disaster. At some point, Bitcoin will reach a tipping point. Now
your question was about the Israel situation. The fact of the
matter is ever since Napoleon, the world knows entering a two front
war is probably not going to go well for your fiscal policy.
Q: From a broader perspective, how do the dynamics between spot
buying and derivatives trading impact the overall health and
sustainability of a potential crypto bull run? Do you think BTC is
poised for further profits? A: Look at CoinRoutes. Our client
volumes almost doubled in October compared to September when
there’s any interest in this market, liquidity comes out. There’s
an old expression in trading; order flow begets order flow,
liquidity begets liquidity. The fact is the crypto markets function
extraordinarily well. The fact of the matter is sometimes the
volatility in crypto happens because there’s too much speculation
around the edges because perpetual swaps are a much more efficient
way of getting leverage than option markets are, for example, and
the US people in equities use options to get leverage. It’s much
more expensive than perpetual swaps. So the crypto market has this
dynamic of a small percentage of the actual liquidity speculating
in perpetual swaps around the edges and moves. Things like what we
saw this (past weeks) when there was the (Bitcoin ETF) fake news
event. It’s kind of funny, the fake news event took Bitcoin from
$28,000 to $31,000 in a blink all in the perpetual swaps markets.
The spot market moved, but it wasn’t a lot of trading going on
because it went up and came right back down. But a funny thing
happened, people who were short realized, “oh my god, if this news
does come out, I’m going to get carried out in a body bag. I better
not short it.” So the natural spot buying that was going on became
relentless and pushed the price to now we’re well beyond what are
we, 25% above where it was before that fake news story came out.
(…) it basically proves that it was spot buying, not derivative
buying because when derivative buying or derivative selling creates
a market move, you see gaps in where the perpetual swap gets to be
too expensive or much cheaper. When we saw that, if you remember
the move down from $29,000 to $26,000 a few months ago, that was a
fast five-minute move that move featured perpetual swap prices over
a thousand dollars per Bitcoin below the bid on spot markets. And
so that was obviously a single de-leveraging event, and that
happens and you see it. But what happened last Monday was clearly
spot-led because the premium never moved. I mean, it literally
never moved. It was moved. The spot actually market led the
derivative markets higher. And so there are clearly spot buyers and
what’s going on is something that I’ve been chronicling for about
eight months, which is we’ve had patient spot accumulation and you
can see that in two ways. If you look at the way things lined up
over the last few weeks, the speculators got carried out and saw
that in a rally there were no sellers. Well, that’s really scary.
If you’re short, you have the condition for what some people would
call a God candle. I don’t know about a God candle or otherwise. I
think that the most bullish thing Bitcoin can do is stabilize at
this level for another few weeks (…). We had seven months of no
volatility in that period of time. People levered up on the short
side and that’s why this move was so strong. Q: You
mentioned this earlier in your analysis, but can you tell us why
Bitcoin entered a “Perfect Storm” scenario? A: I wouldn’t call it a
perfect storm because US regulators are still trying to shut down
crypto because crypto is ultimately, it’s not really crypto, it’s
digital assets. They’re trying to shut it down, slow it down, and
stop it from overtaking the incumbents in finance. The fact is the
US has the number one capital markets in the world. 50% of
investible assets are here despite being what 4% of the world’s
population that is on the back of having the most efficient analog
financial system. So the incumbents would love to delay
digitalization or co-opt it. So that’s the one thing that’s going
on that’s not perfect. But the perfect storm aspects of it are
overseas. So yesterday the UK came out and basically said, listen,
“if you’re going to let us be the global hub for digital finance,
we’re going to be (…).” And that is more or less exactly what
happened and why the London became the big financial center. It is
because of the Eurodollar market, because US regulators pushed the
Eurodollar market out of the US and of course it became
headquartered in London. So history may not often repeat, but it
does rhyme and we see that. But take the regulation to the side,
the perfect storm is very simple. It’s burgeoning deficits and
monetary debasement on a global scale (…). (…) fiat currencies have
never in financial history ended with anything other than
debasement ever, because governments who have the ability to print
money out of thin air will do so until the market stops them. It is
becoming more and more evident to anybody that the fiat experiment
of Bretton Woods, which started in 1971, which isn’t very long in
monetary epoch, is coming to an end. Now, will it come to an end
now or could we extend it for another 10 to 15 years? Maybe 20?
Yeah, maybe. But if you do that, then what’s going to happen (…).
Related Reading: XRP Price Confirms Breakout Above Multi-Month
Resistance: Next Targets So if you think about a perfect storm, we
have an emerging digital society that’s more and more global every
day. We need a store of value that people can save in. They want to
spend in dollars. And that’s why Tether and stable coins are so
important, but they want to save in something that’s a store of
value. Bitcoin solves the part of the equation that’s saving not
spending. That’s why, yeah, at some point you need the scaffolding
to be able to spend the bits or lightning or whatever to be able to
spend Bitcoin, but not at these levels. If you’re a Bitcoin holder,
why are you buying a cup of coffee with Bitcoin? You want to be
made fun of, like the pizza guy, doesn’t make sense because you
think it’s going to go up 20, 30 or more times. That makes it a
very expensive cup of coffee. So, Bitcoin is a savings vehicle and
stable coins are a spending vehicle, and Ethereum is a technology
platform to allow the world to go more and more digital. And so all
of these things are happening and the meta trends are all for them.
The macro trends in the economy are all for monetary debasement and
trying to get out of a debt spiral. And the more geopolitical
instability, the more likely that debt spiral is to materialize.
Cover image from Unsplash, chart from Tradingview
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