The Determinants of the Recent Bitcoin Price Spike

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Decipher Editor Dan Roberts explains why the price of Bitcoin has risen over the past week and the regulation is stablecoin.

Video transcript

ADAM SHAPIRO: OK, 14 minutes before the closing bell. Crypto Corner Time. We need to talk about crypto, and we’re going to do it with Decrypt editor-in-chief Dan Roberts. Before I get to some of the headlines I have to ask you, Dan, because that’s what a lot of people watching want to know, we have Bitcoin over $ 50,000 again today. What’s behind it? I mean, a week ago we were almost at $ 41,000. One thing in particular drives him?

DAN ROBERTS: Yeah, I think there are two big things, Adam. First off, Fed Chairman Jay Powell specifically answers the following question: Are you planning to ban or restrict cryptocurrencies like China has done? And Powell just said no. So that was encouraging for crypto traders. OK, you know, the headlines were saying that the Fed wasn’t trying to put China all the way on crypto, or at least that was our headline at Decrypt.

And then speaking of China, I think China’s hangover has kind of subsided. That is, about a week and a half ago, again, China banned Bitcoin, as they say. And we discussed it last Friday. You know, China sort of bans crypto every two months now. None of this is completely new. It first cracked down on mining years ago in 2014, then again in 2017, then again a year ago, then again two weeks ago.

So every time China does it, the price goes down. But now the price has rebounded as people start to realize, okay, nothing has really changed so drastically in terms of China’s stance on crypto mining and on Chinese companies using the crypto for transactions.

The story continues

SEANA SMITH: And Dan, one thing that could be seen as pretty bullish here for crypto going forward is some of the institutional commentary and involvement we’ve seen over the past couple of days. I know Bank of America, they came out with a note saying the digital asset industry is just too big to ignore. We released the news from US Bank Corp or US Bank today. They are launching a Bitcoin custody service. How important is this to crypto investors and, really, I guess, to the future of crypto and its generalization?

DAN ROBERTS: Yeah, Seana, the B of A rating said crypto is too big to ignore. Not just Bitcoin, much more. It struck me as sort of a bullish haiku on crypto. So [INAUDIBLE] and also, you know, the American bank that offers custody of cryptocurrencies to institutions, which has become a very popular activity. This is something that Coinbase has done very well with almost quietly. I mean, we’re talking more about Coinbase as a retail brokerage, which is where regular people can buy Bitcoin.

But when you offer crypto services to institutions like family offices or hedge funds, you allow those companies to invest in crypto on behalf of their clients without having to worry and get their hands dirty with it. technology. You know, there are places now where they might be run by people with a certain level of technical knowledge or not. And they decided, we should probably be in Bitcoin, but ugh, I don’t want to worry about holding my clients’ keys and, you know, being in charge of their wallets. Let someone else do it for you. Let someone else take care of it. So this is what the US Bank is getting into.

Look, I think the story has been the same for the whole pandemic, that is, the traditional institutions that in the past have probably stayed, you know, six feet from crypto are ready to go. dip a toe, even if it’s just 1% or 2%. And all of that spurred the price hike that we’ve seen. In contrast to that, the thing that still throws cold water is fear of regulation. And every few days, it continues to emerge. And every few days you hear new comments from Gary Gensler.

But what I keep telling people is that just because Gary Gensler and the SEC have made it clear that they want to regulate crypto doesn’t mean they’re going to shut it down. He’s not saying I want to stop everything. But he thinks those assets should be regulated.

ADAM SHAPIRO: And yet, Dan, I mean, the article on Decrypt you sent us about the SEC going after Circle and stablecoin, USDC – and you also explained to Decrypt what the ‘USDC and Its History – When I was reading both articles I kept thinking, well, how is that really different from people trading forex? I mean, why is the SEC doing this but not going after the forex traders?

DAN ROBERTS: Well, okay. I mean, that’s a good question. And what Gensler said, which also seems pretty reasonable to me, is, well, these stablecoins that are pegged to – and they don’t call it Fiat, but the term crypto has become Fiat to mean currencies. of the government. These are regulated, in a way, by a number of different bodies. Why shouldn’t these digital assets that use these other Fiat currencies as their entire base be regulated in the same way and be subject to the same standards?

And I understand that. You know, Circle created USDC with Coinbase, so it was this open source consortium called Center. And I think the reason Circle is the one that was subpoenaed in July – and we don’t know who else was subpoenaed. But that’s because at the present time, the USDC is sort of the standard bearer for stablecoins. There’s also Tether, which has been really the subject of criticism and, you know, has been questioned a lot about its support. Does he really have the cash in full reserve that he claims to have?

But basically USDC and Tether are the best dogs. And then there are a number of other hot and rapidly rising stablecoins. And again Gensler is looking at them, and he sees them as assets that should be held to the same standards as currencies or government assets or in some cases gold that we also monitor and agencies have certain to say.

ADAM SHAPIRO: Dan Roberts is the editor of Decrypt. Thanks to be here. We look forward to our next Crypto Corner with–

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