It’s in bitcoin’s ‘nature’ to become less volatile

00:00 Josh

rapid decline in Bitcoin down 30% in just the last month or so, has many investors wondering whether crypto winter is coming. But my next guest says that crypto will eventually see less volatility. Join me now, we have Alexander Bloom, Two Prime CEO. Alexander, it’s good to see you. So, let’s talk about this move here. So Bitcoin reaches that record high above 126,000, that was October 6th. Now we’re back to about 93 here. We did actually slip below 90. What explains this move? How how do you make sense of it?

00:47 Alexander Bloom

Josh, great to be with you. Thanks for having me. Uh I’d say there’s a couple industry industry specific factors along with crypto specific ones. I mean crypto goes down 30% sometimes even in bull markets, that’s common behavior. If I’ve been through in the 12 years I worked in Bitcoin, it’s been down 80%. Um there’s also I think just sort of macroeconomic headwinds that people are nervous about. What I can say though is that, you know, we work with some of the largest Bitcoin holders in the world, corporate companies that hold billions of dollars of Bitcoin and they’re I had a client today asking if they should take out another loan to buy more Bitcoin and clients are asking if they can get more long exposure through derivatives and so I think the constitution of who owns Bitcoin has changed to a more institutional basis and they see this as shopping season, not a time to panic.

01:52 Josh

Do you give targets, Alexander? I’m just wondering, you know, for Bitcoin, what do you see maybe 12 months out?

02:05 Alexander Bloom

I think there’s uh a lot of positive things to look ahead in terms of loosening liquidity conditions, the end of quantitative tightening and uh regulatory elements that are changing that all make me think Bitcoin will be significantly higher than it is now into next year. I can say, you know, last four, eight years ago, we had clients, they did not have full-time lobbyists in DC talking to politicians all day, uh, advocating for this asset and getting rules passed. I think we’ll see market structure and new kinds of rules passed because there’s money and huge support and energy behind Bitcoin that uh is here to stay.

03:00 Josh

Do you think Alexander, you know, obviously when we think about Bitcoin, we think of a a volatile asset. Do you think looking ahead, does it become less volatile as as institutions move in harder?

03:15 Alexander Bloom

Absolutely. I think the nature of any emerging asset is for it to become less volatile. You have clients hiring us to trade volatility to pull Bitcoin out of the market for them on the scale of billions of dollars. Uh you have other professional traders doing this. You have a different constituency, you know, like our clients, you know, they own a hundred million dollars of Bitcoin and it’s 2% of their whole uh sleeve in their portfolio. And so groups like that, you know, they’re not going to get shaken out because there’s a 20 30% move. They are expecting that and it’s sized into what they’re doing. And so in the institutional nature of the kinds of clients moving into the asset, you’re going to have less volatility because they’re just not as reactive. These are long-term holders, uh looking for macro upside and inflation hedges that uh are okay with small, you know, small moves, uh 30% in the short term.