Bitcoin’s post-ETF drawdown continues, testing support at $40,000: CNBC Crypto World

CNBC Crypto World features the latest news and daily trading updates from the digital currency markets and provides viewers with a look at what’s ahead with high-profile interviews, explainers, and unique stories from the ever-changing crypto industry. On today’s show, Steve Kurz, global head of asset management at Galaxy Digital, and Kathy Kriskey, senior commodity strategist at Invesco, discuss the firm’s joint ETF partnership.

Chapters:
00:00 – CNBC Crypto World, Jan 19, 2024
0:24 – Bitcoin ends the week lower
1:01 – The headlines
3:29 – Invesco and Galaxy on ETF

For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

» Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision
» Subscribe to CNBC: https://cnb.cx/SubscribeCNBC

Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide.

Connect with CNBC News Online
Get the latest news: http://www.cnbc.com/
Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC
Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC
Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC
Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC

https://www.cnbc.com/select/best-cred…

#CNBC
#CNBCTV

Bitcoin’s post-ETF drawdown continues, testing support at $40,000: CNBC Crypto World

Today Bitcoin sinks to $40,000 as the post ETF route continues we give you an inside look at how much crypto was a focus at the world economic Forum in Davos and Executives from Galaxy digital and Invesco discussed their joint spot ETF partnership and what’s next for crypto now that these products are

Trading in the US welcome to cnbc’s crypto world I’m Jordan Smith crypto prices in the red to end the week as of noon Eastern Bitcoin dropped to the $40,000 level for the first time since mid December ether fell more than 2% hovering around $2,400 and salana sank more than 7.5%

The moves lower in digital assets weighed on crypto related stocks like coinbase and micro strategy which as of noon Eastern both dropped more than 4% the Bitcoin miners were also all in the red with Marathon sinking nearly 9% and Riot and clean spark both falling more than 6% for the week Bitcoin tumbled

Nearly 8% ether fell nearly 6% and salana fell nearly 7% all right let’s talk about the latest headlines coinbase could feel the impact of more investors dabbling in spot Bitcoin ETFs according to Reuters which cited analysts the crypto exchange could take a hit to its trading volume and margin and coinbase’s trading

Commissions and spreads could also be affected as well JP Morgan warned that if spot Bitcoin ETFs succeed it will push potential coinbase customers into the hands of equity Brokers on top of that new investors could be attracted to lower than average fees charged by ETF issuers and the convenience of getting

Exposure to Bitcoin through regulated stock exchanges CFA researched downgraded coinbase to sell from hold saying the company could be forced to cut its trading fees to stay competitive with those new ETFs we reached out to coinbase for comment but didn’t hear back right away however spokesperson

Told Reuters that at the moment the firm doesn’t plan to lower transaction fees and expects to benefit from a broader adoption of Bitcoin since the new ETFs became available in the US Stock markets last Thursday shares of coinbase have dropped more than 21% compared to the

Nearly 12 % slide in Bitcoin next the world economic forum is wrapping up in davo Switzerland and crypto world’s Mackenzie sallos is on the ground to walk us through just how much crypto was on the minds of the world’s business and political leaders I’m here on the ground

In Davos where world leaders and CEOs from the biggest funds in companies on the planet are gathered to talk geopolitics business and especially Tech last year at Davos the crypto discussion dominated panels at the world economic Forum but this year AI took over up and down the main street here which is

Called the prominade companies and countries were advertising their AI Tech but Bitcoin and the recently launched spot ETFs in the US were another major talker on cnbc’s air JP Morgan CEO Jamie Diamond remains a critic but others like black rocks Larry Fink are all in and there’s certainly a lot of enthusiasm

Around Wall Street jumping into the sector in fact for the $ 30 trillion advised wealth management industry the floodgates could be about to open analysts at Standard Chartered anticipate Fund inflows in the range of 50 billion to hundred billion in 2024 now the world economic Forum may be

Wrapping up but you can catch much more of my coverage on everything from crypto to AI over at cnbc.com all right back to Spott TFS for our main story yesterday I spoke with Steve KS of Galaxy digital and Kathy krisy of Invesco about their joint ETF partnership how it’s going and what to

Expect for crypto now that those ETFs are live Kathy I want to start with you Invesco and Galaxy’s btco is among nearly a dozen spot Bitcoin products up for trading in the US right now we are speaking exactly one week after the ETF launched and I’m curious to know how you

Think it’s going so far what has adoption looked like and and sort of what sets btco apart well thank you so much for that question Jordan because we believe our partnership sets us apart so Invesco could have done this by ourselves right Galaxy could have done this by themselves we chose to partner

So we’re leader in ETFs right we’ve been doing ETFs for 15 years we have half a trillion in assets um and this is a differentiator we focus on Innovation Galaxy and I’ll let Steve talked about their strengths but they are the digital native with you know 5.3 in assets under

Management Super Creative really focus on education and we knew that we are better together and we believe that no one else is offering this and we can talk through some of the advantages we have but the launch was very exciting obviously historic event um and the btco we believe is a differentiated product

Um not all ETFs are the same and there are many differentiations and we’re going to talk through them but one of the ones I wanted to highlight is um just um tracking error right when people want to buy a Bitcoin ETF they want Bitcoin exposure they want that price

That they see on this screen for Bitcoin and it is very concerning about some of our competitors and the operational structures that they have in place that really will limit um them being able to get this sort of as close to the Bitcoin price as possible they will have a lot

Of tracking error and Steve I know Steve can talk to you about what happened in Canada with one of their ETFs there but the fact that the SEC chose for this to be cash creates alone and not in kind was a major hurdle for our a lot of our

Competitors there was almost Panic amongst our competitors for us we’ve got this Invesco has done uh um Bitcoin uh spot Bitcoin ETFs in Europe and then um galaxy has done them abroad in Canada in Brazil and Germany and so we had the operational Advantage right out of the

Gate and that was very um pivotal for us and when you look as an investor at this huge swath of count counter parties and how do you choose who to go with and a lot of focus is on fees and we were the first ones to come out with the waving

The fee so but now a lot of our peers are at that same fee waiver down to zero but it’s not just about the management fee right we talk about like the total um cost of this and so you need to consider the bid offer spread this

Tracking error like all of these factors where our combination of Invesco and Galaxy make us we would argue the best competitor amongst our peers yeah Steve I want you to talk about that Advantage I mean Galaxy as mentioned uh has plenty of experience with the cash create ETF

In Canada uh you have experience in Brazil and Europe as well talk a little bit about how that experience prepared you to you enter the US market uh and why you’re entering the US market right now as crowded as it has become yeah sure and and I would Echo a lot of what

What Kathy said I mean this was an easy decision for us um one thing that’s consistent with how we’ve approached all of this is the partnership ship approach I think a crypto native is is great at at accessing Bitcoin uh a crypto native is great at trading Bitcoin we traded

More uh crypto than any asset manager in crypto globally last year three and a half billion dollars of crypto uh for a variety of reasons we’ve got a whole platform uh that that’s not just the ETF side of our business but active funds uh liquidations of bankruptcies Etc so we

Really do have that market texture and connectivity to the market I think we’ve learned a lot uh in Canada Canada is a cash create market and when you look at the workflows that we’ve been able to map over many years and through many crypto Cycles what ends up happening is

You figure out how to Source uh Bitcoin very efficiently whether it’s going up or whether it’s going down whether other people are in the market for Bitcoin at the same time and you really build trust uh and and familiarity with those underlying uh liquidity providers and so

When we say uh you know Canada as an analog it’s very directly analogous in the cash create side and we were able to outperform our our competitor by 10,000 basis points last year so 10% and so I don’t want to diminish from the fee conversation it’s important it’s

Relevant we will be aggressive on fees we already have been we were the first ones to do the 0% waiver uh but I just want to highlight that the most important thing for investors is who’s going to be here to stay in the long run who’s going to help you contextualize

This in the portfolio who’s going to track Bitcoin uh the best and then of course you know fees and all the other things that matter so I think you have to look at it holistically and you really have to look at it over time as

Opposed to any any one moment or any one day out of the gates Kathy something that’s come up already several times is the race to lower fees this increased competition what is your what are your thoughts on consolidation you know we have a dozen of these is this something

That you expect expect by the end of 2024 heading into 2025 that that will still be the case really we do believe there will be consolidation but it’s going to take time I feel that almost every one of our peers in this space will give it at

Least a year right and that’s what’s important for um our partnership we’ve committed to the long term the multiple years like we joke about like we are officially married right long term and this is um we understand though that some others it was a great idea they saw

The opportunity it made sense right this is what every client has been asking for and so they thought it will be fine and I know a lot of them have had operational challenges right which I said like we haven’t but I think that they’re giving it a try and you know I I

Respect that but I do believe we’ll have a much smaller Universe of competitors it by the this time next year yeah I also want to ask you about where you see this ETF fitting into an investment strategy for just a moment because Bitcoin has been called by some as

Digital gold or hedge against inflation but we’ve also seen Bitcoin maybe sort of waver or struggle during this recent period of economic uncertainty so from your perspective where does this ETF fit into a diversified investment strategy as a safe haven or something with more risk well I love that question because

As you know my background is Commodities right 30 years of Commodities and we’ve been telling telling this story for Commodities saying like there should be a 5% allocation to most people’s um portfolio and a lot of investors did put their 5% in and we’ve done the math with

Galaxy and the math works out to 1% from equities actually gives the best risk adjusted return and when we did this analysis we only went back five years because I think it’s sort of a cheating when people go back to the start of this right and like oh thousands of percent

Returns right that you this is a different time right so the last five years I think is a good um sort of time frame to analyze in terms of trying to decide what should this allocation be now we know that it’s going to be challenging for people to do the 1% but

Even just that theme of getting off zero is key and so I like to think that Bitcoin is inevitable right it is something that whether you want to invest or not you need to learn about and I think that’s why it’s great to have programs like this where people can

Try to understand like what is the value of Bitcoin right it is a macro asset and that mike novogratz always leads with that is a macro asset and so it’s affected by inflation by the FED moves by you know how is the economy doing right and even geopolitics so I think

That for those who want a diversification element again like Commodities we think it deserves that 1% allocation but we know that it will take time and that’s why we feel like we’re not in this big rush in to get money in immediately we know that our advisers

And our clients need time to learn so looking ahead Invesco and Galaxy have a proposal in front of the SEC to launch spot ether exchange traded funds and back in December the agency actually delayed that decision and they decided to push it to February I’m not going to

Ask you to comment on that specific proposal itself but I do wonder if you believe that the approval of these spot Bitcoin ETFs will make it easier for other crypto exchange traded products to be approved here in the US yeah look as a first step uh the reason we partnered

With Invesco was because this was not about one product and it wasn’t about two products and it wasn’t only about single asset products it was about the technology being braced on a much broader Suite so we think over time to Kathy’s point we’re going to have a

Great Suite of crypto products uh we are excited about ethereum I think the Market’s already showing you that it’s turning its eye to ethereum a bit there’s been a rotation trade uh that’s happened over the last week week and a half and then most importantly I think

You have a real uh road map how do you become an Institutional asset you move from CME Futures osc traded ETFs Futures ETFs in the US and then the spot ETF so obviously we can’t comment on the sec’s uh approach to any filings or any one

Asset but I do think you know of all these assets uh Bitcoin and ethereum have established themselves they have real use cases they have real market caps uh and they have real narratives and they have real uh purposes in a portfolio and so from that perspective

Uh I I would be surprised if we didn’t have an ethereum ETF and we’re going to be there and ready to go when uh when it’s time to do that all right that’s all for crypto world this week we’ll be back again on Monday and we’ll see you then