MLIV Pulse: Most Crypto Investors Want Regulation

elements of financial markets. It's called the m Live Pulse Survey for the Markets Live team taking the pulse of financial markets in October, that team asked investors for their opinions about crypto. Obviously, Bloomberg Senior editor from Markets Kasha KLi Manschinska is part of the Markets Live team and responsible for these surveys. I think you know that retail and professional investors may be investing, and it's coming for

different reasons. She joins me today. Along with Bloomberg reports of Vildana Harreck, crypto has been moving in the same way that stacks have been moving basically all year long. To talk about the crypto results, Kasha, Buldana, so good to have you on the show today. I feel like we just barely scraped out what certain types of traders were calling October right, this idea that October just about managed to end the month in crypto higher than where it started, and it was a bit of a slug,

but but we got there. And one of the other things that we got to in October and Casha, I love your perspective on this is what I thought. It was a little bit of a surprising result from some investors that your team pulled about, you know, crypto market sentiment. Tell us a little bit more about what your findings were and where these findings came from. Yeah, thanks for asking. So my team halls very broad group of investors every week. So there are portfolio managers, sell side by side traders,

even some executives, and of course retail investors. So every week we asked them about something different. You know, one time it's strong dollar, the other time it's treasuries, and then the meme stocks, and this time we asked about bitcoin.

We found a lot of interesting things, but one of them was that they expect bitcoin to kind of stabilize in and trade in what you would say would be a narrow range come compared to where the bitcoin went over the past year, where it was all over the place, right, So now investors that are saying it will stay between eighteen thousand and twenty five thousand dollars, which is still a wider range than's treading out right now, where it's

basically between like eighteen and twenty thou five hundred dollars, right, And then you can also argue that it's kind of a positive outlook. I mean, it is both downside and upside, but not to the extremes, right. I Mean, we did a similar survey a couple of months ago, and back then people were expecting BIT going to go to the ten thousand alaris or even lower. So this time you could argue that investors are actually more optimistic about the

crypto asset Filana. What other signs of optimism are you seeing in the markets, whether in in folks that you're talking to, or just what you're seeing in fun flus or other areas. I like to focus on the macro pictures. So when I speak with investors, crypto investors, scripto strategy samalists, I always asked about what's going on with the economy with what they're seeing in terms of what the Federal

Reserve is doing. Because we know that all of those actions by the FED in terms of them raising interest rates this year is really what's weighed on risky assets, including cryptocurrencies. So within the stock market, and this has happened so many times this year. I think something like five or six times we've seen stocks rallying because investors are expecting a so called pivot from the FED. Now

that word actually means different things to different people. For some, it means that the FED is going to stop hiking interest rates. For others, it just means that they're going to be less aggressive. And we know crypto has been moving in the same way that stocks have been moving basically all year long, and so some are expecting that if we do see this FED pivot, whatever it may mean or whatever it may look like, that we could

also have a turn and sentiment for cryptocurrencies. And Kasha, to Danna's point about the macro environments, one of the biggest macro themes that's been not just influencing crypto with driving crypto is regulation. What did the Market's Life Pulse survey have to say about regulation? Yeah, so I think we're quite surprised by this fine thing. So we ask investors if they think not only regulations, but also enforcement is positive forever. It will make them buy more invest

more in crypto. And they said yes. So according to again this broad group of investors, some of them might be crypto enthusiasts, some of them might be skeptics, but they overall they seem to be saying, okay, taking Bitcoin and other cryptosis out of the so called wild West and into the main stream traditional investing, it's good for us. That's where we are willing to look into it and added to our postfolios. And when you say abroad group, you know, we had and it was more than five respondents.

I think the exact number was five hundred and sixty four, and sixty percent of those respondents said that they thought the recent space of legal action, including enforcement, was positive

for crypto. I was really interested in the breakdown between folks who identified themselves as like retail investors and professional investors on this question, because the retail investors said that, you know, sixty of the retail investors said they will be more likely to invest in crypto because of this grace enforcement, but only fifty six percent of the professional investors said the same, Which is I think that to me that that breakes me as unusual because a lot

of the the rhetoric around we want regulatory clarity seems to have come from the institutional space. Do we have any theories as to why we had the split between retail and professional on this question? Oh sure, yeah, And I think Bill Dana can probably talk about it a

little bit as well. But I think you know that retail and professional investors maybe investing in bitcoin for different reasons, right, I mean, I think for some retail investors is making some kind of a statement being independent from the mainstream financial system, whereas for professional investors, I think it's going another Crypto assets might have a little bit of a

diversification element to them. And again I think Bill Dana has already mentioned that a little bit that B's going so far this year has been moving in tandem with some other financial assets, which I think for some professional investors might actually be a negative. Right. They were looking for something that will be moving in a different way.

So if the entire market is impacted by the FED, they want to have something in their portfolio that will, you know, not go down with the other assets or not go up, And they may be thought that bitcoin would play that role. But again, so far this year, it seems that know that unfortunately bitcoin is kind of you know, joining the race with with with other assets, and that might just not be as attractive for some.

And if I can just add a little bit to this, I also love the quote that we had in the story, mostly because I got this quote, but also because it's really good and it's that the more regulators can get crypto out of the wild West, that's the key phrase, and into traditional investing, the better off it's going to be.

And I think when we've talked about this on this podcast before, where there's this sort of never ending hope, there's never ending optimism within the crypto space, especially on the part of retail investors, where the feature is always going to be bright if you are a sort of true believer in the space. So that's I think part of it. But the other part not to to tamp

down on the party too much. But I think there's a difference between people saying that they'd be interested in the space if there's greater regulation and actually them waiting into the space were we to see greater enforcement. I'm reminded of an editor who used to say that you know, the best survey of market sentiments is the prices themselves, and they've been quote unquote boring recently. Bitcoin is boring well.

According to one of the questions in the survey. We also ask people like, what what's one word you think of when we say bitcoin and with a like lovely little word cloud And there were a few that were all roughly the same size and they were bubble, volatile, future, ponzi and scam. So I mean, despite the shall we say, measured enthusiasm about the possibility of investing more, it seems that there's also a degree of concern about the robustness

of this ecosi them and Filana. One of the things that we started to observe, in addition to a d percent increase in the price of Devote over the past couple of days, is as bitcoin is both you know, quote unquote boring, but also other elements in crypto. The more the bigger and more traditional tokens are providing less and less of a hedge, we are starting to see people look for alpha elsewhere, right, and in some cases that might be the meme coins. In some cases it

might be defy. Do you think we're at a point in crypto where folks start to chase like yields at any costs, no matter the risk profile. I'm not sure because so I've been talking to people about this recently

because bitcoin has been so quote unquote boring. So the question is whereas over the last couple of years, you could implement any number of wild trading strategies and you could go there if you are a super high risk, high adrenaline person, you could wait into the space and actually make a lot of money very quickly if you knew what you were doing, if you knew how to

trade some of these these strategies. And so now the question is what are people doing if volatility has come way down where you have comparisons to the stock market and on some days you have Bitcoin just like wavering around a certain level and stocks just going like nuts all the time. And you see a lot of people making that comparison and saying, well, crypto is now less volatile. And then also we just have not really had a

catalyst that's helped prices breakout upwards. We had an announcement from black Rock where they had a partnership with coin coin base, the crypto exchange, and prices basically did nothing. So even this huge, huge announcement wasn't able to shake things out of the sort of dul drums that that we've seen. So I have been asking people like, how

are you making money now? Some are, you know, utilizing sort of sort of traditional strategies where and they see bitcoin prices go down, they waited in and they buy around seventeen or eighteen thousand. But then also you have people implementing like different options strategies and for some that's working, and and there are other strategies like marketing initial strategies, these like weird wonky things that people out there just looking to find ways to to make things a bit

more exciting. We'll be right back with more from Bloomberg Reports of Aldonna Harrick and senior editor from Markets, Kasha Klimasenska. Kasha, going back to the word bubble, right, going back to the word bubble, you know, risk was there about the same size as the word value. And the way that word clouds or word bubbles work is you know, you kind of like match the size of the thing to the number of responses. But one of the ones that

was kind of still up there was gambling. So it does seem like there's still a perception, especially among institutional investors, that even if the volatility is reduced, the risk profile of crypto overall is still high. Do you do you think that's a fair characterization of the findings. I mean, that's kind of what we were trying to find out with this fall, and I actually going out of it. I'm not sure I got the answer because you know, yeah, the gambling is there, but again, you know, it's also

a palsy and future. I think it's kind of you know, gambling is still award that is associated with it's going but um, and I can't feel then I might have a different opinion opinion, but I think it has been gradually going away over the last year, and the more there's regulation and putting crypto into the main stream that the more the gambling aspect will will go away. Right.

But it's also I think because this year overall, I mean, correct me if I'm wrong, but I think this is the year of risk off right and going with the safest. I mean, the best bad you could have made this year would have been too bet on the dollar, and you know, imagine that. Ask my grandma and she would have told you that it's not a risky that at all. So I think I guess that's a question that we have to ask again three months from now and we'll

see what people say. Indeed, Um, two other questions that you did ask in the survey were around the flippening, which is frankly, let's be clear, this is a terrible word, but what that word refers to is the idea that ether, which is the second largest token by market value, could overtake Bitcoin. And you know, I think it's like only a third of those polled in the surveys that they think the flippening could happen in the next two years, which is about the same that folks got in July.

And you know, you there was also this lovely quote in the story did you get this one as well? Build on a possibly for sure um from Victoria Green of the Squared Private Wealth, which said, it's almost like a religion. If you believe, you will always believe, no matter the price or the headwinds. And cash is just on that note, a question for you, are there any other asset classes that you or the folks on Markets Life cover that have this like similar grounding and belief

rather than say fundamentals. Oh yeah, that's a good question. I would say probably not. I mean, you know, most of the faults that we talked to every day, they do look at fundamentals and data all the time, right, That's that's all They live in the world of excels and spreadsheets. But yeah, I would definitely give it to Bitcoin. They they built quite a brand. Um. Nothing seems to be able to take it away, even this boring range

that it is trading in right now. And that's also why you have where it's like flippening in October and all these different memes, and it's basically like everybody has their own lexicon within the space because it's a little tight knit community and they speak with one another, and then you have these words sort of crop up or or be sort of made out of thin air, right, and because it's a way of identifying that you're part of the in group. Terrific. Well, Casha, maybe we will

see you in three months, I hope. So all right, thank you for being on. Appreciate you both, Thank you, Thank you. You can find more of their reporting on the Bloomberg Terminal, on Bloomberg dot com and on Twitter. Vildonna is at Vildonna Harrick. That's v I L D E N A H A g R I C. And Kasha is k Klimashinska. That's the letter K and then K L I M A s I N S k Hi.

It's Dusta and the Bloomberg Crypto podcast team. It's been a dramatic week in crypto with the sudden troubles of sand Bankman Freed's ftx dot Com prompting a bailout offer from its biggest rival, Binance Holdings, only for the deal to fall through. We'll have the latest on the deal that wasn't and what it means for investors on the next This week in Crypto, 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,

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