Reflecting on Crypto's Wild Ride Since June

we wanted to do. Every day we take a look at all things digital assets, the merge, absolutely, algorithmic stable coins of course, bitcoin mining, no doubt. And we talked to reporters, editors, analysts, investors, industry experts, academics, policymakers, all in service of helping you better understand how crypto is shaping and being shaped by finance and culture. So for this one episode, we're flipping the focus just a little.

We're gonna spend some time answering your questions and hearing from Bloomberg Senior Executive Editor Chris Nigi, a k a. My boss the creation of of the Wedger, of the blockchain letger seems like probably a kind of immutable part of the evolution of people kind. Chris, Welcome to the podcast. Chris.

You are here not just because you are my boss, but that helps, though, but also because part of your responsibility here at Bloomberg is understanding better than any of us really, like why markets are doing whatever it is that they're doing. What has it been like for you having to do that for Crypto for the past year or so, pretty crazy, I would say, to begin with. I mean, it's not like the rest of the world's

markets have been behaving particularly sanely. Let's just establish that at the outset um, this has been as looney h two and a half years as I've ever seen. But I would say Crypto has just been sort of a

proxy for the emotions that are driving everything else. It's been somewhat of a lesson in whichful thinking, which markets frequently are needless to say, But I think the big sort of kind of logic artifact of the last eight months or whatever it's been has been the upending of the big theory around which is that it was would

work as an inflation hedge. I don't think anyone really knew whether that was going to pan out, coming in and watching it turn out not to be true, and for crypto to be quite pretty much everything else a call option on the world's liquidity has been pretty instructive. I think we can pretty safely say at this point it's not working out as an inflation hedge, and it's uh,

it's Corroatian to everything else wishful has has been. It's it's a big feature, and from the perspective of people who don't want it to be correlated, more bug than feature, really right, It's like in the absence of having something like Bitcoin as an inflation hedge, in the absence of having wacky tokens in your portfolio that you should be getting like some alpha out of because they don't move

like anything else. What makes these markets interesting, then, the raw psychology of it all, I think is its main attraction. It remains hard for me to see exactly what the value proposition is here. I think that separate from the from the question of whether or not it's a workable sort of means of exchange, which I think is a much more interesting topic for crypto in general. It's speculative

meaning has I mean it's always been pure. We just that it's been how many people can we get enthusiastic about it, just like many other things and beat it if we real markets right now like technology, Cromly, Meme stocks, but really the rest of the market. There's another aspect of it that I find pretty interesting. You know, people who have written bitcoin both up and down, and the way that it works as sort of again in wishful thinking aspect, the people who wrote it up are largely

the same people who wrote it down. Says so much about what investing is. The ability to hang with something that rose as much as bitcoin in the sort of it's saladays one I am convinced and this is like maybe my first rule of investing. It is the exact same thing that causes you to hold it all the

way back to where it is now. Um. I have relatives who have done this, who if you said a single discouraging thing to them about bitcoined any Thanksgiving is where these things typically happen, you would you know, you would be basically depending on the specific road punched out of the room. And this lesson the fact that the same talents to make you a star investor in the way up are the ones that kill you on the way down. I just think is arguably the most interesting

sort of immutable fact of markets. You said a couple of things there that kind of anticipated some questions that we got one of them very directly, right, So, Philip Route in do crypto markets reflect the same kind of trading psychology as other markets? What I'm hearing from you is like, there's definitely a psychology, but it's not the one you might necessary only expect. I was talking to one of the producers on the show, Sharon earlier, about the fact that you know, people buy high and sell

low in crypto, which is very confusing. But it's that same energy that you're describing. Yeah, no, no question. Again, it's just as millions of people have said, it's just the sort of reinvention of of facts of investing and finance that have been been with us forever. Something's hype catches on and that's what draws people to it. Again, it's particularly pronounced in bitcoin because or crypto in general.

Because I failed to sort of understand what exactly the argument is that should give it sort of speculative value. I'm aware of some of the argument some of the qualities that made gold into a lasting store of value. The fact that it doesn't rust was a big one of them. Was by far the closest I ever came to understand. And why this stuff should work is a long term store value. It's it's immutability, it's finiteness. That is something that kind of gives it a kind of

intrinsic difference from everything else. But still, there's a lot of scarce things in the world, and it's been difficult for me to quite differentiate Bitcoin from from a lot of those that don't have any value, don't fluctuate, go up and down like crazy. So again it's just been a pure hype machine. It's, uh, you know what else can we say? I I it gives me no great

pleasure to make that case. But that's what happened over the last three years with meme stocks, with all these things that I feel like people largely knew better about and decided to take a punt on anyway, And I guess this is what happens. Well. Charlie who asked the question why does a crypto like bitcoin have any value? Um, the answer is maybe you know, I think it's it has value that not to get to sort of either heady or existential, but some some days I feel like

it has value because people decided has value. There's a lot about crypto that to me has always behave less like a predictable financial assets and more like, as you said earlier, a barometer of sentiments than anything else. That's true, I mean a lot of the stuff that gets rayed around it as UH sort of initial conception, digital unit of exchange, a thing for remittances, just blockchain sort of database ledger technology. In general, I think it's really subverted

by the obsession with its UH. It's up and downs causes a lot of waste to occur around around the asset. It's very difficult to obviously make any of these means of exchange systems work with the thing fluctuating like crazy. Another thing is that a ton of bad money is thrown at bad ideas result of it. I think this is a big problem right now. Your your average sort of cryptos startup is some number go up, number go down thing in essence, and it's diverting money from things

that actually could work. When thinks, I mean, maybe that's how how things like this always work. Undoubtedly, it is to some degree that you're going to have a long period of wasteful spending that absolutely happened during the Internet bubble, and then good things when people not coincidentally, when the price finally collapsed and the obsession went away, that's when

sort of the serious commerce started to be built. Right, You are perhaps inadvertently echoing the idea of many adventure capitalists right now that this is the time to build right, the notion that the speculative accesses are being run out of the market, the irresponsible players are having to be more responsible ergo, we should see some actual use cases arriving sometime imminently. Yeah, and the psycho is not in

any way different from the way nineties. I feel like another big distraction was just the number of Charlotte's involved in it. A lot of clear grifters that were sort of the face of bitcoin for a long time. It's good that they that they get moved out. I mean, they're never going away completely, but that doesn't help the case, and it makes it very easy to throw mud at it. And believe me, I love the throwing of mud at it.

I think, you know, but all of these distractions were not a great thing for the overall prop it's just made it so assailable. Coming up, you'll hear more from Bloomberg Senior executive editor Chris nag and we'll be answering direct questions from our listeners. We'll be right back. It's sort of weird when institutional investors or representatives of institutional investors are like, I would like more volatility, please, because

my job is not fun enough. But I'm getting vibe, you know, And having been covering this and some of the things that we've talked about is that a lot of people are in this because they felt like it would be fun. And the existence of the Charlottean's, the grifters, the bad money being thrown after bad ideas was like some sort of acceptable externality as long as there was a good time to be had. But now there are new policies and everyone is sad, but the grifters are

still there. I am sure that the untold stories of sort of speculative fortunes that were made off this thing through that. I mean, you know, f t X is reasonably forthright about some of their capers in the in the space you can only imagine given heads fun wherewithal and the intelligence being poured into the trading side of it, the stories that see, the uncovered stories that exist around just gigantic fortunes being made. The fact that that may

have been coming to an end. People are lamenting that. Well, you know the welcome again just scuation you had, you had a window to get that done. I suspect a lot of really smart people did get that done, are sitting on island somewhere, and again, these things have life cycles.

So if you are one of the persons sitting on a yacht or on an island who made a bunch of money doing shenanigans and would like to tell us about it, all of the reporters of Bloomberg have signal, feel free to let us know we're having to chat at any time. One of the big picture questions that we got and I feel like you are uncommonly qualified to think about this, given the remit of your universe is from Johannes Where do you think crypto will be

a hundred years from now? I struggle with the like the baseline question of like, what do you think is going to happen tomorrow? So a hundred years from now feels hilariously far away. But are there any kind of big ends that you're seeing that you think either crypto is like going to benefit from or is it just going to be nuclear war and none of this is gonna matter anyway? Well, that'll probably be true. But leaving that out, I do feel like the whole concept of

trustlessness is kind of inescapable evolution of basically everything. I think, just sort of the distributed nous of online life and the way that trend is going, the way you know, everything is becoming basically unverifiable that you look at in the world, deep fakes, Twitter, like everything that goes on

is totally depersonalized increasingly and impossible to trust. I think that that aspect of it is probably right at some level, Like the creation of of the ledger, of the blockchain ledger seems like probably a kind of immutable part of the evolution of of people kind basically. So, in a very odd sense, I suspect that the discoveries in the area of sort of restlessness is it's what it's big discovery is going to end up being. And if everything gets tokenized and I have an app where every single

possible financial gesture. I could possibly make scandaled through the same channel someday. I wonder if that will be me, But I do feel like the arrow of financial revolution sort of heads in that direction at some level. Well t I L. You are a gigantic hobsy in so no amazing Well, thank you so much, Chris, A pleasure to have you on the podcast. Same, thank you, Thanks again to everyone who's amissed questions, and thank you Chris Nig.

You can find Chris ns with a at Chris nig One that c h R I s n A g I one on the next episode of Bloomberg Crypto. September might have a reputation for being cruel to the bitcoin faithful, but are they also in for a ska in October. 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 Vergalina. Our senior producer is Janet Babin. Our producers are Mohammed Faruke and Sharon Barriro. Our associate producers are Ty Butler and Moses on Them. Desta wonder At is our engineer. Original music by Leo Sidron.

I'm Stacy Marie Schml. We'll be back tomorrow at the Staring at a Fund in a d