The Breakdown - Apple CEO Tim Cook Reveals Crypto Holdings as BTC and ETH Hit New All-Time Highs

Starting point is 00:00:00 Do we actually start to see something of a split market where Bitcoin and a handful of other cryptos are going up because of macro fears while alt and more speculative coins are going up because everything is flowing into wild money at the end of a cycle? That I think will be pretty fascinating to watch. Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The Breakdown breakdown is sponsored by Nidig and produced and distributed by CoinDesk. What's going on, guys? It is Tuesday, November 9th, and today we are talking about a new all-time high in Bitcoin and Eth. What's driving it? What makes this time different? What's the

Starting point is 00:00:49 on-chain data telling us? Let's dive in. Last night, Bitcoin and ETH both hit new all-time highs. Bitcoin hits 68,38260, and Eith hit 4,82395. Overall, the crypto market cap is right around $3 trillion. It has added about a trillion dollars in the last month. So today I want to discuss what's driving these moves, what they suggest about where we are, how much macro is involved, all that good stuff. And first of all, I want to start with on-chain indicators. There has been a ton of on-chain analysis recently,

Starting point is 00:01:26 and the biggest discussion that I'm seeing over and over again is how it just doesn't seem all that overheated right now. UTXO management writes, the mayor multiple is a ratio between price and the 200-day moving average. It can be used to gauge when Bitcoin is overbought or oversold. Compared to previous multiples and all-time highs, we're nowhere near overbought yet. Willie Wu points to the NVT signal. Now, NVT signal is network value over the 90-day moving average of daily transaction value. Willie tweets, NVTS is one of the oldest on-chain signals gauging on-chain investor volume. Adjusted NVT signal is back in the mid-zone, which means price is no longer overheated.

Starting point is 00:02:09 Assuming it's a bull market, historically, this is a zone where price is ready to move up. Willie also writes about investors right now saying huge price validation between 50K and 60K. Bitcoin is a $1 trillion asset class, in my opinion, is now cemented. Hard to see it dropping below this zone. Dylan Leclair asks what the Bitcoin perpetual futures funding rate says about the ability for high levels of long-levered demand to be sustained. He says, could funding on perps be a little lower? Yeah, but look at what happened after the 20K Bitcoin all-time high broke last December. Massive inflows into spot Bitcoin market allowed high leverage in the derivatives market to persist and grow amidst a 200% increase.

Starting point is 00:02:50 Will history repeat? Another indicator has to do with the Bitcoin held on exchanges. This has continued to go down, which is sort of the opposite of what usually happens at all-time highs, where sophisticated sellers usually move their Bitcoin onto exchanges as people get prepared to sell or at least have the option to sell. Glass node called the last week in Bitcoin remarkably strong in tweets, as Bitcoin hits new all-time highs, exchange balances continue to be depleted. Exchange reserves we track account for just over 12.9% of the circulating supply and are still seeing outflows even at all-time high prices. some point that this might mean that more is happening on the OTC side. Jan Wustenfeld writes,

Starting point is 00:03:30 the Bitcoin fund flow ratio continues to stay low. The seven-day moving average even has started to move lower again in the last days after being slightly up before that. This means more transfers are happening non-related to exchanges signaling potential OTC deals happening. But none of this explains why this is happening now. So let's go back to Glass Note and switch to the demand side. Here they have a great little explanation of what they call the demand dynamics in a bull market. They say these dynamics tend to come in two phases. Quote, one, smart money accumulation pre-all-time high, where on-chain activity is low, supply dynamics remain constructive, and most spending looks like strategic profits being taken.

Starting point is 00:04:10 Two, hyphen euphoria post-all-time high. As media coverage of the asset increases, retail trader interest rises, and on-chain activity starts to climb. Older, more experienced hands generally increase their distribution from this point onwards. Both the sell-side supply dynamics described above and the demand dynamics that follow, both speak strongly to current market characteristics still being of the first phase, smart money accumulation, albeit closer to the transition out of this phase. End quote. Glassnote goes on to discuss on-chain transactions being similar to levels seen during the 2019 and 2020 bare markets and say, quote, this observation of prices near all-time highs while on-chain activity is near bear market lows is quite a remarkable divergence. It speaks to a

Starting point is 00:04:54 convincing case where the market is likely still in the quiet accumulation phase, punctuated by low activity, large exchange outflows, and very modest strategic spending by experienced holders. Okay, so the idea that we're getting here is that we're still in this smart money accumulation phase. Well, who is the smart money? The biggest narrative surrounding this all-time high and the one that we just reached is the return of the institutional money that kicked off this bull market last year. Anthony Scaramucci tweets, 70K on Bitcoin coming up, Up, large institutional demand has finally arrived, trying to get in orders before 2022. Dylan LeClair tweets institutions are currently implementing multi-billion dollar accumulation strategies.

Starting point is 00:05:35 They're in the market every minute of every day working to secure Bitcoin allocations. Vertical accumulation continues. My source is myself, who looks at the charts, data, and order books every day. What do you think is driving the rally? A huge amount of capital still needs to get off zero. That tweet actually referenced an older tweet of his from a couple of weeks ago, where he wrote, over 17,000 BTC were withdrawn off exchanges over the last hour. Big Money is racing to secure allocations under the surface.

Starting point is 00:06:03 Just look at the chart. Big Money is using Twop, time-weighted average price bots to secure positions. The same strategy Sailor used to buy 100K plus Bitcoin is being used by institutions and firms around the world. They're currently in the market buying every second of the day. All in all, Dylan says, Bitcoin looks and feels a whole lot like late November 2020. On-chain hoddle trends are remarkably strong. Any new market entrance looking to secure sizable allocations will have to materially bid up the price in the process.

Starting point is 00:06:32 Vertical accumulation. It's happening. NIDIG sponsors this podcast, and they're helping CFOs, traders, and risk managers safely and securely integrate Bitcoin into their operations. Learn more about what NIDIG does and how they do it at NIDIG.com slash NLW. That's nydig.com slash nLW. Now, I don't know enough to validate or deny Dylan's thesis that, quote, big money is using time-weighted average price bots to secure positions, but there is a fair bit of institutional overlap leaking into the news. A Morgan Stanley report suggests that institutional investors are getting more interested,

Starting point is 00:07:16 saying institutional investor interest is participating and the upward price momentum is building. MasterCard announced Monday that they are partnering with three different digital asset companies to enable CryptoLink to MasterCard, credit, debit, and prepaid cards for the Asia-Pacific region, a region in which 12% of people said they used crypto last year, and 45% of those surveyed said they're likely to consider using crypto in the next year. What's more, remember, MasterCard announced last month that it was working with BACT to allow merchants and banks to build crypto into their offerings. And then, of course, there was Tim Cook.

Starting point is 00:07:48 The Apple CEO was at Deal Book this morning and was asked if he personally owns Bitcoin and Eath. He said, I do. I think it's reasonable to own it as a part of a diversified portfolio. I'm not giving anyone investment advice, by the way. At the same time, though, Tim Cook was clear that his interest was from a personal point of view. He said that he had been interested in cryptocurrency for a while and that he had been researching it. But he didn't suggest that Apple was going to make a move into that space.

Starting point is 00:08:14 He writes, I wouldn't go invest in crypto, not because I wouldn't invest my own money, but because I don't think people buy Apple stock to get exposure to crypto. Now, does this mean that Apple might be working on crypto-related products? Well, Tim kind of threw cold water on that as well, saying that while Apple was looking at cryptocurrency technology, it wasn't, quote, something we have immediate plans to do. Funny enough, Udi Ortheimer had just given a pullback prescription on Twitter saying, what happens next? Bitcoin mini-nuk to levels not seen for two days, Bitcoin ranging for a week,

Starting point is 00:08:44 Alt Wilden. Then the king comes back. Take as old as time. But then when the Tim Cook news broke, he quote tweeted that tweet of himself and said, ignore all of this. Tim Apple just said he likes crypto. Micro Strategies Michael Saylor gave some advice to Tim, saying if Apple were to add support for Bitcoin to the iPhone and convert their treasury to a Bitcoin standard, it would be worth at least a trillion dollars to their shareholders. On top of all this Apple and Tim Cook stuff, there's also the old rumor mill around ETFs. Barry Silbert from DCG juiced

Starting point is 00:09:15 Twitter on November 7th when he tweeted, going to be a big week. 26,000 likes and nearly 4,000 tweets later, we still don't know exactly what he's talking about. But we did learn recently that BlockFi has thrown its hat into the ring around a spot Bitcoin ETF as well. And in total, there are now almost 40 physically backed and derivatives-based ETFs that are still awaiting approval from the SEC. But still, all of these factors clearly involved in these new all-time highs are not getting at the underlying why. And for that, I think you have to go macro. The truth is, we've never left Paul Tudor-Jones' great monetary inflation thesis. We just had some breaks along the way while China tried to ban Bitcoin once and for all. Now, here we are a year after

Starting point is 00:09:58 this inflation concern-driven Bitcoin bull market started, and guess what? Inflation is even more of a concern now than it was then. The Federal Reserve is coming into their taper, right? The ending of their $120 billion a month bond buying program in an extremely precarious position. They believe they have to be seen as peeling back support for fear of the market overheating, but they structurally can't let interest rates go do whatever they want or peel off that gas because there would be chaos in the markets. The reality is that we're not back to any sort of normal because a new normal is still being discovered. And whatever that normal is is pretty much not being acknowledged. Tracy's shoe chart writes, the fact that the Federal Reserve issued the most bearish tapering statement ever tells you

Starting point is 00:10:40 they're scared out of their minds. Meanwhile, 10-year and 30-year real yields on U.S. bonds are in the negative. Remember that pension piece I shared from a couple days ago. Pension are flush with cash but trying to figure out where to put it. They literally can't allocate to what used to be safe bonds because of this negative real yield. And because of that, it's creating immense pressure for them to get into other types of investments. Neil Jacobs quotes the global head of equity strategies at Jeffries, who says, the arrival of the Bitcoin ETF and the growing mainstream acceptance means that it's timely to make a further adjustment to the global portfolio for USD-denominated pension funds as a way of hedging the risk of the collapse of the US dollar.

Starting point is 00:11:20 So what does this all add up to? Well, the tone around this all-time high is frankly a bit more muted. It's not a triumphal Bitcoin all-time high by any stretch of the imagination. The Bitcoin shake tweets, is it mere to CT and sentiment in general, seem extremely mellow, considering that both BTC and ether are at all-time highs right now. You can also see this in the lack of price prediction post, right? Willy Wu says, what's my prediction for the top of this cycle? Since I think this is the last cycle, the one that takes us to saturation, which, if it wins, we can't put a USD value on because things get valued in Bitcoin,

Starting point is 00:11:54 thus the cycle top is easy to pick. It will be one Bitcoin equals one Bitcoin. And I think this gets at the idea that this is really driven by those macro factors coming to fruition. Another possibility for the muted tone is that this is ultimately just more of a continuation of the march up. There was a bigger psychological boost when we reclaimed the all-time high that we had surrendered because of that summer fud season a few weeks ago. Something I'm also interested in watching is what happens next and specifically, do we actually start to see something of a split market where Bitcoin and a handful of other cryptos are going up because of macro fears while alt and more speculative coins are going up because everything

Starting point is 00:12:35 is flowing into wild money at the end of a cycle. That I think will be pretty fascinating to watch. To round us out, though, I just wanted to reference all 354 or something even more than that now folks who responded to my tweet last night asking what the root of this new all-time high was. I'm just going to run through a summary of what people said. More demand than supply. Supply squeeze. Supply short on exchanges. Network effects. Equity top during revenue retraction. Inflation. Price, general acceptance that the floor is in before the next leg up. NFTs and broad crypto adoption. Q4 cyclicality of dumb money having excess funds.

Starting point is 00:13:12 Spot ETF applications, Bitcoin cycle placement, i.e. were mid-having cycle. Big tetherprint. institutions starting to allocate, Barry Silbert, chartology, giving buy signals, infrastructure bill passing seen as stimulus, Elon with liquidity, Bitcoin surviving the China mining and transaction bans, Bitcoin ETF launch, El Salvador illegal tender, change in mindset to use for purchasing power appreciation rather than trading, a guy wearing a Bitcoin shirt around New York City, changes at the Fed, inertia, inevitability, scarcity of Bitcoin, abundance of USD, collapse of the dollar, Fed irresponsibility, and math. What's clear is that there is a lot going into this that ranges from the micro to the macro, and even though it might be more muted, it's still a pretty

Starting point is 00:13:51 fascinating and exciting time. Until tomorrow, guys, be safe and take care of each other. Peace.

The Breakdown - Apple CEO Tim Cook Reveals Crypto Holdings as BTC and ETH Hit New All-Time Highs

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