BTC Sessions - Bitcoin Bart Patterns | OG Coins | Will Tether Flippen ETH EP066

Episode Date: June 5, 2020

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Wasabi wallet and fairly private. What's up everyone? I'm Ben with the BTC Sessions and this is your daily session. Hodel their Bitcoin. Today's show is a little bit different. I've got a guest on. This is actually Brian from Bitsy and he has some expertise in in I guess markets and charts and a lot of different stuff. So I figured while I had him on, why not? get some clarification on the infamous Bart pattern. If you're unfamiliar, the Bart pattern happens relatively often in Bitcoin. That's where it has a sudden spike upwards, has some

sideways action, and then spikes right back downwards, looking a lot like Bart Simpson's head that up, squiggly, then down. So we talk a little bit about that. Liquidity in markets and how the Bitcoin market has matured over time. We also get into a few other things, the recent scare with the supposed Satoshi coins moving, which was since debunked, but we talk a little bit about the implications of some of these early coins starting to move around

and see activity. And we've seen it before, but we just kind of do some hypotheticals. Then we also dive into the growing market that is tether. It recently flipped, it recently flipped ripple or XRP, whatever you wanna call it anyways, XRP is ripple.

Anyways, it recently flipped XRP as the number three in market cap. And there was another article that came out talking about it potentially over time becoming number two and replacing Ethereum. And so we talk about is this a possibility? What are the implications of that? Is it possible that a stable coin could ever become the number one in market cap?

Personally, I possibly think so. There's infinite dollars, but would that even matter? So we talk about a bunch of different stuff. Anyways, I hope you guys enjoy this. And as always, I want to give a shout out to my sponsors. First up, leaden.io, this is a company that I've been using personally for the past over a year now. They've also been partnered with the show for quite a while. They allow you to use your Bitcoin for a variety of different services.

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Welcome to the BTC sessions. I've got a special guest today. We're going to be chatting about a whole bunch of different stuff, Bitcoin related and market related and news related. This is Brian from Bitsy. Brian, welcome to the show. How are you? I'm good. Thanks for having me on the show. Awesome. Glad to have you. So maybe before we dive in, do you want to just describe a little bit about what you do? You're obviously, you know, I work with you at Bitsy, although we don't see each other a lot, given that we're on opposite sides of the globe. So that makes me that much more appreciative to have found a time to

get together. But yeah, maybe just fill people in on who we are, what you do. Yeah, sure. So I'm the chief, my official title is a chief product officer at Bitsy, but I wear many hats. I, you know, John and I, we launched Bitsy Exchange back in 2018 and we have been doing everything since then. including design of the products, coding up the engine, designing the specifications of the products, everything, even including working a lot of our customers from around the world. So it's been a great journey, and I think we have a lot more exciting things to come in the future.

Awesome, awesome. Well, again, welcome. I figured it would be, you know, people always like price talk. And I am by no means a technical analyst. But I do find it sometimes, I find it gives me a bit of a level head if I look at possible outcomes sometimes. And I'm able to sit back and not panic when any of those things happen, whether it be up or down. So I do see some value and and fun and watching the charts. We saw a hell of an interesting movement in the last little bit in the form of the famous Bart pattern.

What I'm going to do is I'm just going to share my screen here so that people know what I am talking about. Let's see here. I'll do this one. Okay. Let me know. know if you can see. You got my screen? Yeah. Okay. So for those watching, the Bart pattern would be this very obvious straight up, a little bit of sideways action, and then straight back down to where

we came from, maybe a little bit lower. But it's called that because it looks a lot like Bart Simpson's head just shoved into the chart. This is like the, this is the one hour chart on Bidsey here. Now, Brian, I'm wondering if you can explain a little bit or maybe talk a little bit about the rumors as to why these type of chart patterns occur behind the scenes. Do you have any insight into that? Yeah, I think something like this. tends to happen when the liquidity on the market is not particularly fit.

Like something like this rarely happens in say legacy markets just because, so one is in legacy markets, right, like all the trading happens on the same venue. But if you look at crypto, crypto has its own ethiosyncrasies in the sense that like you look at crypto exchange. Liquidity is kind of segregated across like hundreds and hundreds of venues. And a lot of these venues have really high leverage 100 or sometimes even more. So what kind of what that leads through in my opinion is that you have really thin liquidity spread across a lot of venues. And it's it's relatively easy for liquidity to kind of be relatively thin compared to the sizes of orders that are coming into the market.

So when you have I mean there has been rumors around why the downlink of the bot pattern happened Some minor in a no minor started selling off a lot of the coins So when liquidity is thin and then you have a big sell in the market it's easy to push down the market by a thousand Just like that in a matter of a couple of minutes But another thing that's kind of interesting during this sell off is that that is the price differences between the different exchanges. Like on this year, we went down to like say 9,300. And then on Derbitt, I think went to like 9,200.

But then on Bitmax, it went all the way down to 8,600. I think that's an odd effect of the fact that there's liquidity. It's just not very thick in crypto compared to legacy markets. And then the amount of, let's say, arbitrage forces is still not as powerful as directional traders who can really push the market around. Because someone who is, let's say, an arbitrage market maker, they see a $6,700 price discrepancy in the future during that like few minute time into both.

It's really like free money on the table. And it's something that you just don't see in legacy markets. Yeah, I was going to say, That's quite the gap. You said anywhere from 8600 was the lowest, like on Bitmex, 9,300 on BITZ. So that's, that's quite, you know, the $6 or $700 gap between many exchanges. That's, that's insane. I mean, I remember seeing quite the differences in the early days, maybe like even through 2017,

but it's not something that we see as often. nowadays, right? Like, it's, am I correct in saying that the, those kinds of discrepancies have gotten less and less over time? Yeah, definitely.

I think back in like 2013, 2014, a lot of people, like you could really just arbitrage Bitcoin between a few exchanges that were around back then. The ones who are on China, the ones who are not in China. And you could do that by hand,

that transfer Bitcoin's around, on the blockchain and then just buy on one exchange and sell on the other. And profit margins were still really good back then. But you can't really do that anymore these days by hand just because crypto market as a whole has matured a lot. So like a lot of guys who used to be at high frequency market makers on the legacy markets, a lot of them have ventured into crypto.

So as a whole, like crypto markets, has definitely gotten a lot more efficient than before. But still, I think like the bot pattern a couple of days ago, still kind of highlights the liquidity is relatively thin. Yeah. Now, and so I suppose that some of that is part of the reason for things like liquid, given that transferring inter-exchange with, with Bitcoin, you know, the block time a little bit slower and most exchanges require,

you know, varying number of confirmations before it gets through. Is that kind of, I suppose that's kind of the goal of liquid when you see an arbitrage opportunity is being able to capitalize on that in a quicker manner? Yeah. So something like Liquid or Lightning Network is going to help really help market makers improve their capital efficiency because it enables them to potentially not have to maintain float across the different exchanges. But also other things, other developments in the crypto markets, like having proper private brokerage lending, for example, has grown a lot in the past two years or so.

So things like that, these are the things that will really help with the liquidity in crypto. Awesome, awesome. Okay. So, In kind of the same vein, I wanted to touch, I'm going to switch tabs here to an article from Coin Telegraph. And it's in reference to Satoshi's coins. This individual is a researcher of the Potoshi coins, which are the coins that are assumed to have been mined by Satoshi himself due to certain unique data contains. within the what's called the nonses of the mind blocks. But besides the point, there's a set of Bitcoin that are presumed to be Sotis coins. There was a scare just recently where some early coins were actually moved.

Not a lot. I think it was 40 or 50 Bitcoin that were moved around. But there was a scare because a tweet went out from Whale Alert saying that these coins from early 2009 were moved and people thought it might be Satoshi's coins and they were worried about the implications of that having happened. We also saw in the same vein these early coins that were claimed to be owned by Craig Wright and apparently the actual owner of those coins signed a message saying that, well, some not so kind of. words about Craig, but besides the point, basically saying that they were indeed the owners

of those coins and not Craig. But we've seen some interesting activity. The point being, we've seen interesting activity and movement and proof of people still having ownership and ability to move some of those early coins as of late. It does happen from that time to time, but it does call into question, you know, what are the implications of something like that? Like if an early miner starts to sell, what happens to the market? I'm talking outside of the spectrum of just general markets being finicky and panicky around things like that. What are the implications of an early Bitcoin are starting to sell off that type of coin?

Do you have any insight into that? Yeah, I think markets, whether or not it's Bitcoin, let's say, Apple or Google stuff, right? It's all about a confidence thing. It's about supplying demand on the market. So if you look at, let's say, you know, like back on Facebook, when IPO, a lot of people were watching very closely the unlocked schedule, the vesting schedule for Facebook stuff. They wanted to see, oh, when are the clips, the supply clips happening? When could, no, the Marks, Berg or Shell Sandberg might be selling their Facebook stock? So people watch these kind of things closely because they see that as insider information.

They understand the company better. And ultimately, it's a supply and demand balance on the market. If an insider, an early investor in a tech company started selling their holdings in Facebook, it's a sign that maybe they're not bullish on the prospects of the company. But also a lot of the times these guys are holding a huge amount of stocks. So when all of a sudden there's a huge introduction of supply of stocks into the market, you kind of spooked them up. And it's a same base Bitcoin.

Potentially, we start to see, well, it was 40 or so Bitcoin this time it moved. But what if this guy decide to next time it moves 400, maybe 4,000 next time? So it ultimately scoops the confidence of the market. And that's potentially what's kind of shock the market a little bit. Does that mean it's bearish? Hard to say. It's all about supply and demand. So, you know, we are also starting to see more institutional hedge funds investing in Bitcoin.

Like, Grayscale, I think I heard they got up a huge amount of supply in the past month or so. So if legacy, like Fiat-based investors, they start to come into crypto, that kind of demand. and also blouse whatever supply that is in the market too. Yeah, absolutely. Yeah, you're correct about Grayscale. I think between Grayscale and just regular buys on Cash App, they're gobbling up more coins than are being mined in their entirety now that the block subsidy has been cut.

So there's definitely from, at least from, existing bitcoinsers and new entrance into the market, there's definitely seems to be an increasing demand with a diminishing supply on the, I guess, of new newly minted coins. But yeah, that still doesn't, I suppose, mitigate the risk of an early bitcoiner selling. Although I guess, to play a devil's advocate, I would say, well, in early, Bitcoin or may have a lot of Bitcoin. They can only sell it once. So what that does to the price in the meantime is another story. But yeah, anyways, I'm going to, I'm going to move to one other topic here. I wanted to touch on. So this was actually, the article here is Coin Telegraph, but it's

referring to Bloomberg. Bloomberg was talking about how it's only, they believe it's only a matter of time before Tether overtakes Ethereum as the number two market cap coin. Now, we saw earlier that it actually overtook Ripple. I have no problem on my own show saying that I'm not a fan of Ripple. But besides the point, is this, do you think that this is a possibility given what we've seen from Tether so far? it seems to be tether continues to grow as more people enter the market and and are actively trading. And so do you see tether getting to that point where it perhaps in market cap eclipses Ethereum?

And if so, is it possible that at some point a stable coin would have a larger market cap than Bitcoin? I mean, we know that we know that dollars, I mean, dollars are essentially important. infinite and when your measurement is the dollar, I suppose anything's possible. But what are your thoughts on this? Yeah. I mean, in the past year, too, the AEUM under TETDA has grown a lot. I think now it's at $9 billion, if I remember correctly. Honestly, I mean, I think it's going to continue growing.

Not just because people are using Tether as an intermediate instrument's. when entering Bitcoin or trading other crypto. But we actually see Tether as having practical use cases outside of the crypto world too. It's actually a very efficient way to transfer money around. So there's a lot of demand from Tether from China in Outshaw as an effective way to move money around. And some of these investors are using Tether

because they circumvent some of the capital controls in China. So Tether demand is very strong from the China side. But other than that, even just using Tether as a form of payment is also pretty active to. Compared to the old days where you have to use PayPal, I guess they have more options these days. But like Tether is still a very effective, low cost and fast way of moving around on the blockchain. do you do you ever worry about um uh anything in terms of of of backing given that so i mean it's it's always interesting to me in that uh i mean fiat currency itself is already you know it's there there's not so much third party risk anymore because fiat currency is just infinitely

printed anyways. But in terms of dollars backing tether, do you think there's any, is there any risk there in terms of, one, if any stable coin was not fully backed and say all of a sudden the U.S. decided to create its own digital version of the dollar that could be sent around,

Could the liquidity drying up within a stable coin, if it indeed ever were to be fractional reserve, be a problem? Like, do you see any risk there? For sure. I think regulatory risk is always there. But like, let's say a country decides to create a own digital version of their own currency, like China's example. I think that's still a bit of difference between what Teter can do versus the national. version of the digital currency. You know, fundamentally, you look at China, a lot of things are digitalized.

Like you can just reach out, you can just Alipay to pay for everything. From taxi or buying a drink at the subway station to paying utility bills. But all of that, from utility standpoint, I guess it's kind of the same of TETTA. You can pay the things. But the fact that Tether, it's It provides a lot of the privacy that people using Tether are looking for. It's something that a national degree of currency provides. Okay, yeah, that's fair.

I'll accept that. Now I guess I'll round it, I'm just going to stop sharing the screen here, but I'll round it out with your general thoughts of kind of where you're going to stop sharing the screen here, but I'll round it out with your general thoughts of kind of where you're, we're sitting post crazy bear market of 2018, slightly into 2019. How has infrastructure held up? From your seat, looking at the industry as a whole, what's being built. Are you feeling good about kind of where we're at right now and the trajectory of everything? Yeah, I think, let me think about this. I guess you could attack it two different ways.

Obviously, there's the market standpoint, but you could also look at technologically and infrastructure-based as far as like wallets and proper security and tools for individuals to use to properly store and deal with Bitcoin. How are you feeling about where we? are even just in the past few years and how we've progressed. Yeah, I think markets, the crypto market has progressed a lot. The lending market has grown tremendously to multiple billions of dollars in lending in crypto, especially on the Bitcoin side these days.

And you start to see a lot of companies are turning into the pride brokerage business, sort of like the Goldman and the JP Morgan of the crypto world. So these are all signs that market as a whole is maturing and sort of catching up with where the legacy markets are. And so I wouldn't be surprised if there's going to be more regulations that's going to put some perhaps a Some friction on innovation that can happen in the crypto space because You can't continue to grow indefinitely without any kind of regulation coming in especially if the market has become such a huge market these days I would have you know, no, I definitely agree with the regulatory. I mean, we just saw, so I'm in Canada here and we just saw as of June 1st, Canada,

like every, every cryptocurrency related company within Canada or dealing with Canada is now regulated as a money service business and has to be so. And so, but at the same time, regulation is a form of acceptance in that you're not banning Bitcoin. So, I mean, it can be seen as both a positive and a negative as you're saying. It could stifle some innovation if you can't get around that. Given the nature of Bitcoiners, I'm inclined to believe that. where innovation is stifled, people will sometimes go elsewhere if they feel that they need to in order to innovate. But I guess that's part of the competitive nature of the regulatory environments around the world with a truly global digital currency. So I don't know.

Would you agree or do you have some pushback on that? Yeah, I think so. But also I want to point out on the on the infrastructure side, I think there's been also quite a bit of innovation and development on infrastructure side. If you look at liquid network, for example, there are more and more entities that are onboarded onto the liquid network. And you kind of need that network effect for something like, let's say, liquid Bitcoin or Liquid Tether to be useful to, let's say, the market maker, or the traders who are using it because you want a lot of venues that support equipment. And I think we're kind of getting to the tipping point where a lot of these technologies are becoming widely accepted and the utility is going to continue to increase.

Yeah, absolutely. Awesome. Well, I think I will wrap it there. First of all, I want to thank you very much for coming on. Thank you very much, Brian. And can you let people know, like, I don't know, do you want, do you want some more Twitter followers? Do you want people to find you on Twitter?

Sure. You can follow me on Infinite Squarewell. Awesome. Well, I will definitely link it down below. Again, thank you guys for watching and be sure to check out all the links down below. And with that, I will wrap it up. Brian, really good to see you. having me thank you guys so much for watching as always do remember to hit like subscribe and share

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