How to Trade an Unusually Boring Bitcoin

So what happens when the market's largest digital asset, Bitcoin starts losing its volatility. Over the last four months, the coin has been trading in a very tight range of around twenty dollars a coin, and it's been unable to break out in any real way. So how have crypto investors who are used to those ups and downs been spawning and how have their investing strategies shifted. For more on how traders are dealing with Bitcoin's stagnation, we're joined

by Katie Greifeld, markets reporter at Bloomberg. Have you been in this space for a long time? You're sitting on still just magnitudes of gains. Katie, thanks so much for joining us, Thanks for having me. I hope we have a really good time. I'm a little bit nervous. I feel like the bar is high. It's extremely high. Filling in for Stacy Marie, Jeez, high for me, high for you. I was gonna say that's a you problem. Stakes are high for you because you need to do a good job.

Can I ask you a question here too? Okay, I'm going So we've been talking about how bitquin has been hovering around the twenty thousand all arranged for a couple of months now, and my first question for you is is bitquin boring? I feel like it's super boring when you look at almost every other asset class that exists. You have stocks, of course, you have treasury bonds which have just gone insane, and then don't even get me

started on the currency market. When you look at the don't want to get the Great British Pound, it's just been totally erratic. So I feel like when you compare bitcoin to its own history, and when you compare it to the rest of the investment landscape, it's super boring. Because people are used to huge swings in crypto prices, right, that's kind of what it's known for. I feel like, so now that we have prices sort of just like meandering around nineteen on a very good day. Around twenty thousand,

volatility has also gone down. Can you talk about that and what that means? So I think this is probably a long term problem for crypto when you think about what attracted a lot of traitors to the cryptocurrency sphere over the past two years, particularly during the pandemic. It's supposed to be exciting, it's supposed to be fun. Now you're just stuck in this range. It feels like a lot of narrow tis have sort of fallen apart, which I know we'll get to. So I feel like cryptos

having a bit of an identity crisis. But I think part of the reason why you're seeing Bitcoin just sort of trade sideways and going a straight line sideways versus what we're seeing in almost every other asset class feels like the marginal seller is gone. They've already been flushed out. All you're left with is the hardcore believers who might be depressed, but I don't think they're going to sell.

You're hitting on a million topics. I want to touch on with you, one of them being the narratives, but maybe just talk a little bit more about why it is the prices haven't really been able to break out because I know, a couple of months ago, for example, we had a really big announcement between black Rock and the crypto platform coin Based. Black Rock chose to partner with coin base because of its scale in the market.

This news coming out with coin Based and with black Rock showing that the institutional demand to be able to trade go through some of the more traditional huge players in the market is not slowed down. And in fact, as the saying goes that this is the time to build, people are obviously building now. And I think Bitcoin rally like one or two percent that day. Nothing It's nothing for bitcoin, it's nothing. So you would have thought maybe

that the reaction would have been just much larger. You mentioned the stock market where we've been going through periods of seeing stocks rallying and bitcoins still stuck. Why is it that there's not been a catalyst really to help it break out. Let's talk about the ceiling and the floor on that range. I think I'll start with the floor, which goes back to the point I made that the marginal seller is gone. I mean I tracked the world of e t f s and exchange traded fund like

products pretty closely. Bloomberg Intelligence has some great data, which is if you look at previous quarters, there was a lot of selling from global crypto tracking funds, and then if you look at the most recent quarter, you really didn't see that many outflows because again that seller had already left. We've already seen this enormous depressing draw down which has far outpaced the declines that we've seen in

the stock market. So I feel like that is acting as a bit of a support on the downside while you're not seeing a breakout there. And then on the upside, even with those incremental pieces of good news, the big backdrop hasn't changed, and that is the feed is actively raising rates, tightening monetary policy, taking liquidity out of the system. And it feels like that is really the huge factor here.

That just isn't an environment where sort of speculative asset classes are going to do that well, and that I think is what's been extinguishing every rally that maybe looks like it's going to get off the ground. I love this point about the Fed. I love talking about thank you, because I remember a couple of years ago, during the pandemic, you and I used to write stories about the very very popular money printer go Burr meme. Oh yeah, maybe you can tell our listeners what that was and how

it's relevant today. That was just the idea of quantitative easing, just the FED buying a ton of bonds, every single bond it could get its hand on, during again, the grips of the pandemic, when it was just trying to keep the entire system functioning. So that was Jerome Pal sort of cranking the worrying money printer. I'm describing it badly, just great, but that was the idea of printing money. That they're just making money out of thin air. That's

going to devalue Fiat currencies. That hasn't happened. The dollar is really strong right now. But if you think about the inverse of that meme, money printer, I don't know dies that's what's happening now. It's basically they're sucking the money out of the system. All that money that was created is coming out. The FED is actively whittling down its balance sheet slow really, but it's happening, and just the signal that this is what the FED intends to do.

It intends to shrink its balance sheet. That's really weighing on every stripe of risk asset right now, which bitcoin, crypto in general definitely falls into that camp, maybe the ultimate one even yeah, the purest measure of risk, appetite of sentiment too. Glitch was a reference to one of the new Taylor Swift songs. I actually didn't even catch that. Which one glitch it's called? Well, that would be easy.

But remember you and I wrote a great story I think in anticipation of the FEDS liftoff hike back in March, that this will be the true test of whether or not crypto was a bubble, because if you think about the FEDS last rate hiking campaign it was it ended in and if you think about where bitcoin and the crypto sphere was at that point, it was a much less large system. There just wasn't as much money involved. I mean, I think bitcoin was under five grand a coin,

so the state were much higher this time around. And I mean it's still early days, I guess, but it seems that so far the bubble has been popped. But how smart were we to write that story. You know, we were so on the ball, we were so ahead of our time. Yeah. I hope our bosses are listening. Yeah,

Stacy Marie, I hope you're listening. So you mentioned the different narratives, and we've talked on this podcast before about, you know, some of the narratives that have existed around bitcoin in particular, where you know, people used to say that it's an inflation hedge or that it's a store of value, and the narratives really have been shifting over the last couple of years, especially this year as prices

have been crashing. So what when you talk to people, what do they tell you the narratives are, or what even when you're on Twitter when people are talking about crypto, what narratives are they associating with the space? They tell me to zoom out. Honestly, because I've asked a few different people in a few different formats, can we put the inflation hedge meme narrative to bed? It feels like it absolutely hasn't worked. We're dealing in the US with

the hottest inflation in forty years. Bitcoin is what down over fifty sixty percent year to date, and I mean, the answer is still that I get is zoom out. It hasn't been around for long enough. In the grand fullness of time, this will work. So I feel like that narrative Most would tell you, Okay, it's we've debunked that one, but there's we put it to bed, but some are still hanging onto it. The store of value

is something I still hear that. You know, this is still the place where you want to put your money if you're worried about government's basically inflating way the value of their currencies. Obviously, that narrative has been a bit more challenged recently. The narrative that I feel like has fallen away is bitcoin as a means of payment. I don't see a lot of people making the case that this should be a currency you use day to day

to pay for coffee exactly, Taylor Swift album exactly. I'm not gonna, you know, buy a piece of pizza or concert tickets to the next Taylor Swift show with my bitcoin? So can I come with you? Sure? We'll be paying with you know, the good old greenback. Probably in terms of what the next narrative will be though, that really drives the space forward for better or for worse. I'm not sure what that will be. I haven't heard a clear consensus around what's next. I love the one on

Twitter that's one btc equals one btc. Have you've seen that? What does that mean? Tell me what that means? Who it means? One bitcoin is always going to be worth one bitcoin? Okay? Cool? Does that make me want to buy it? It should? Yeah, this is what people on Twitter are hoping. Yeah. Yeah, I guess I'm not necessarily the target audience for that one. Yeah I am. Yeah. I feel like you hear that a little bit around or more than a little bit around stable coins. Oh really,

I don't know what do people say about tablecoins? One stable quote? Yeah, of course there's one stable Yeah, but I think the one bitcoin equals one bitcoin is just the idea that it's crashed, but there's hope. Well we'll see if it gets down to one dollar and then one bitcoin will be Oh my gosh, that's dark. You're gonna get hat on Twitter for that. I didn't say it. Don't at me. Please up next more with Bloomberg reporter Katie Greifeld on how investors and traders are adapting to

Bitcoin's lack of volatility. Okay, so we're talking about how bitcoin has been hovering around twenty volatility has come down, the space has become a little bit more boring. You and I also, over the last couple of years, have been writing quite a bit about how there's so many opportunities within the crypto space if you're a trader to take advantage and potentially make a quick book, or to sort of take advantage of some arbitrage or some discrepancy

within the market. So things are a little bit more boring. Now, what are people doing? This is a great question because it brings me back to the days where I covered actual currencies for Bloomberg News. I started at Bloomberg as a traditional currencies reporter, covering the dollar, the euro, the yen, the pound, and back when I was doing it, it wasn't fun. Nothing was happening. There was absolutely no volatility

in the space at all. I'm talking about. Like, so, I wrote a lot of these stories about, Okay, you're a currency trader, how do you make money? You run a heade fund, you have to make money. What are you doing? So it's kind of a similar idea here, And you had a great story on this. Actually, part of the way that people are making money is that they're selling options on crypto. This is a way to make money in a sideways market, not necessarily taking a

directional bet. And that you know, rhymes with some of the stuff that you saw in traditional currencies back in the dark days of no volatility. I thought this was interesting too. There are some people going long. You spoke to a portfolio manager at Ledger Prime, so I mean

hope springs eternal. I guess there. Well, that's the big point, right And I remember speaking to somebody else at Valkyrie, which is a crypto ascid manager, and they said, if thecoin comes down to seventeen thousand or eighteen thousand dollars,

that they're actually buying at that level. So is this something else that we're seeing where you do have people who are just going to be long term and I really mean like long term believers in the space, and they're finding opportunities prices come down and to the point if you've been in the space for a long time. And when we spoke a little bit about where bitcoin was at at sort of the peak of the last

rate hiking cycle, we're talking what dollars per coin. Even now at like nineteen twenty thousand dollars, have you been in this space for a long time, You're sitting on still just magnitudes of gains. So that makes sense that if you're a long term believer that you would just sort of cover your eyes and keep buying because the line will go up. There will be other October's to look forward to October. This last point in this great article that you wrote is really interesting to me. I

think we should look into this more. Basically creating a distressed asset market strategy. When it comes to some of these dows, those centralized autonomous organizations, I'm still wrapping my mind around them, but basically they're supposed still allow the holders to vote on different proposals. It's a different way to run a business. They have treasuries like they have treasury assets, not treasury bonds that they're sitting on, and

in some cases those treasuries are in distress. The prices of the treasuries are beneath the treasury value, so that's a really interesting arbitrage. So you can force the DOW to potentially vote distributing that money, right, which is cool. That feels like another traditional finance strategy coming into the world of crypto. So I guess, you know, if you want to fight, that's one way to do it, sort of force a dow to liquidate the treasury and then take those assets. Are you up for I'm up for

covering someone who wants to fight. If anyone here is running that specific strategy, that's fascinating. Yeah, And I think that's a really interesting way to sort of pick through some of the speculation that we saw, especially in DAWs because thats were so hot. I feel like a couple of months ago, a year ago too, there was something about stealing the Constitute, not stealing by Yeah, I'm thinking about stealing the Declaration of Independence. No na, no, no,

no, no no, buying the constitution. So there was a lot of that froth, and you know, just as you would see in sort of the distressed bond market, people are trying to capitalize on that. Yeah, this was the most fun conversation I've ever had. This was the best. This was the best part of my Thank you so much for joining the podcast. Thanks for having me. You're welcome. You can find more of Katie Grydfeldt reporting on the Bloomberg Terminal, on Bloomberg dot com and on Twitter. She's

at k Greyfelt. On the next episode of Bloomberg Crypto, we're gonna talk about bitcoin miners who've been having what can reasonably be described as a very bad time of late. Folding bitcoin prices and soaring energy costs make for a tough combination for the companies in this sector. For more on the challenges facing these miners, tune in tomorrow. M This is Bloomberg Crypto, a daily podcast from Bloomberg and

I Heart Radio. For more shows from I Heart Radio, visit the I Heart Radio app, Apple Podcasts, or wherever you get your podcasts. Send us your comments, questions, or suggestions for the show to Crypto at Bloomberg dot net or find us on Twitter. We're at Crypto. The supervising producer of Bloomberg Crypto is Vicky Verglina. Our senior producer is Janet Babin. Our producers are Mohammed Farruk and Sharon Barriro. Our associate producers are Ty Butler and Moses on Them.

Desta wonder At is our engineer. Original music by Leo Sidrin. I'm Stacy Marie Schmal we'll be back tomorrow.