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Well, good afternoon, everyone. It’s Dave Weisberger, CEO of CoinRoutes. And it’s time for this week in Crypto. It’s Friday, July 8th, and it’s been a little under a month since bitcoin crashed from 30,000 down and left its old trading range to get to as low as 17 or 18,000, depending on what time frame or what product you’re talking about. Since that time, it’s bounced in a range between that 18,000 and 22000 and we are again plumbing the top of that range, and so people are starting to get excited, relieved, etcetera. Others are saying, oh, it’s the eye of the hurricane, we have to wait for the trailing edge, etcetera. I don’t know which it is. What I do know, however, are a few features that are coming into focus. The first is we’ve seen waves of selling from people who had to sell.

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The first were obviously the deleveraging of people who were in the process of going bankrupt, and we’ll talk more about that when we get to the news. The second were miners who capitulated by selling what they had to to pay for equipment. And the third were other people who had lost money in various risk assets having to sell bitcoin as one of the only stable forms of collateral that they had. And that’s something that’s very important because we’ve talked about this a lot. Liquidity will trump pretty much anything else, and bitcoin, compared to all other crypto, is the most used as collateral.

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Therefore, it becomes the asset that gets sold when there are issues anywhere else in the system. This, of course, causes lots of people to ramp up the debate between bitcoin maximalism and others. And while I don’t want to get into that now, it is interesting, and I will talk about it toward the end of this segment, but the feature of this market is still the same. It’s must-sellers against cautious and opportunistic buyers. And we’re still seeing the hash rate in the network and the other macro viewed items within the bitcoin network look positive.

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We’re still hearing about various developments in terms of building the network, lightning and others where adoption seems to be increasing. So I get more and more bullish on the long-term side of bitcoin every day. Is there a potential for another leg down some point later this year? Of course there is. But have we found a bottom or is there natural buying interest in this area? Yes, and that’s what we’ve been seeing. But let’s talk about the news for the past week because there are a few stories that are worth discussing. The first one is, unfortunately, a rehash of an old one. The SEC once again rejecting a spot bitcoin ETF, only this time the price that rejected at Grayscale is suing them under the Administrative Procedures Act. Multiple lawyers that I’ve seen in media have given them a pretty good chance on this case.

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And frankly, if facts matter, they will win against the SEC because there really is no justification. The state of justification, there is no regulated market, is insane. They say the futures markets are regulated, therefore they’re great, except for the fact that the futures markets are based 100%, 99.9999% on the spot markets and are actually easier to manipulate than the spot markets. Not to mention the fact that there are multiple regulated spot markets in the United States, all of which make their data public for what’s traded. So surveillance would be very easy.

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All of which, to my knowledge, is using one of a couple of vendors solidus labs or events to do internal manipulation checks. And all of that should add up to a market that has some trust, that has much more transparency than anything else. So we’ll see what happens with that. But the other interesting part about that story was the Wall Street Journal putting out an editorial saying something that I’ve said in these commentaries and in many other places, basically dating back to the beginning of Gensler’s reign, which is that it feels like his reasoning is much more about politics. And they even said something that I’ve said before, which is that he is intentionally harming investors in order to make his political point.

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They phrase it is holding investors hostage. But I won’t quibble. The fact that the Wall Street Journal is willing to say what people like Ryan Sulkas and I have been saying for the better part of a year is a little gratifying. But more to the point, it’s almost certainly true at this point. There’s no other reason that anyone can think of and there’s been over a year for Gensler to highlight other reasons that he hasn’t done so.

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So that’s important and could be tipping the scales as politics starts to catch up with him. The second story is, of course, the ongoing bankruptcy story. This one a Voyager, and I won’t get into the details of who borrowed who and who lent what. But what is fascinating about this story is even sophisticated financial people who invested in Voyager didn’t realize the counterparty risks that they were taking with three arrows and potentially other lenders or other debtors to them. Counterparty risk is extremely important and the risks that are being taken in the market are equally important when clients provide funds to a lender for a particular interest rate.

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And so as a result of all of this, the Treasury Department released guidance about how things should be disclosed and the Vice Chair of the Federal Reserve gave a speech basically saying similar things, which is people and investors deserve disclosures who know the risks that they are taking. And that is very important and I think that it is extremely important as we move forward to understand the counterparty risk, enter the lexicon that people care about and also what firms are allowed to do with money. If you give money to a firm that says we are a proprietary trading firm. We are going to take risks with that money. In order to pay you a high interest rate, you may say, okay, cool, or you may say, no, I want this high interest rate, but I don’t want people to be taking that kind of risk.

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But the investors deserve to know what’s being done. And that’s something that goes beyond the pale of prescriptive regulation. It’s simply something we believe as an industry should happen. And the treasury is calling for it, many other people are calling for it, and with hope that will be what occurs. The last thing I want to talk about today is something that came out of a webcast or a live stream that I did with Scott Melker on The Wolf Of All Streets. And big thank you to Scott for inviting me. This one was with several other people, including Caitlin Long. And Caitlin and I got into an interesting conversation. Caitlin is a very big believer for those who don’t know that crypto does not need leverage in any form and that leverage is dangerous. In fact, she calls it Fiat thinking.

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In order when one thinks that you have to have more complicated markets, she says bitcoin is pure and people can use it to exchange value, and that is that. And while I actually think that in the long run there will be a large part of that in the bitcoin world. I do think that people have a need to get into and out of Fiat over time. Whether into Fiat when they need to pay for things their children’s college education, a car, a boat, or their mortgage. Or out of Fiat when they want to take money that was disposable and say. You know what, I want to invest it in Bitcoin because it has a hugely positive asymmetric return and will hold my value better than any other way of saving. But the fact of the matter is, those on and off ramps imply transactions. And where Caitlin and I were discussing was the need for a market structure to make it such that those transactions could be done efficiently without paying a lot, either in bit offer spreads or in wildly incorrect prices because venues get out of touch. And I think that that’s really interesting because what I’m suggesting is that best execution, the principle that CoinRoutes is founded upon trying to help clients achieve, is a necessary principle in order for us to bridge the gap from a current Fiat based market to one that does get to bitcoin and uses it.

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And perhaps at some point in the future, if there are no other cryptos. Which, by the way, we know I’m not a bitcoin maximalist. I don’t believe there will only be bitcoin. But in any event. To bridge the gap between digital assets the way they are today and the way they will be in the future. In order to do so, we need best execution. And that’s really the point that I would make there.

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But I would recommend that everyone watch that particular livestream, because we talked about a lot of banking issues, a lot of money issues, and we got into a lot of the nitty gritty. Well, that’s enough for today. Thank you. And stay safe out there.