Why Bitcoin Is Having a Moment: CoinShares' Demirors

at thirty three eight hundred forty six today. It is down about three tenths of one after a couple of very down days in the last few days. Let's bring in somebody who knows a lot about this. Meltham the Mirrors is chief strategy officer from coin shares, Google's seven hundred fifty million dollars in the digital space. Well to

thank you for joining. What do you make of the flows into the likes of bitcoin over the last few days and weeks and the amount of sort of new vehicles that have cropped up, including Anthony scaramuci Is new Bitcoin ETF. Yeah. Absolutely so great to be back on the show, and I want to make a minor correction. We actually coin shares hit a record high as three point nine billion in a u M, so it's quite a step up from the seven hundred fifty million we

had about a year ago. And actually on the first trading day of the year this year, we had a new high where we saw over two hundred million dollars of our change trader products traded in one single trading session January four, big day. So I'll definitely say there's a lot of interest in crypto ETPs and crypto vehicles. Just melt him. Let's let's carify exactly that you had seven fifty million a year ago, you have what now?

And has it been due to flows or due to the you know, the massive gains that we've seen in the likes of bitcoin. Absolutely, so we have three point nine billion in assets under management in our exchange traded products and that is a result of two factors, as you alluded to. One factor, obviously, is the price rise. That in addition, we've seen a tremendous amount of inflows into our et p s as well as other structured products.

And again what we're seeing is a tremendous amount of participation from not just crypto native asset managers like ourselves. We are currently the second largest asset manager in the world in our industry. But we're also seeing traditional asset managers, hedge fund managers Anthony Scaramucci, one River in the UK entering into this market and in significant size. We're talking

about multibillion dollar vehicles here. So new inflows combined with the price rally has resulted in a tremendous amount of market activity across the board. Talk to us about the trading that we've seen melt him in bitcoin just specifically, it's had just extraordinary rise up here. I'm just looking at it. You know, back in March, when a lot of risk assets were melting down, it was about five thousand dollars in here. We are, you know, just under

thirty four thousand after peaking it over forty. Talked us about what we've seen in the price of bitcoin, maybe even the recent volatility, uh bitcoin absolutely and the trading story. You know, we have a large trading desk at our firm. We're trading about five to seven billion of notional volume every month. What we've really seen last year around this time, the majority of bitcoin trading volume was in the bitcoin teather trade pair. Teather UM, as some of your listeners

might know, is a blockchain based digital dollar. So the majority of volume we saw was happening during Asia trading hours in the Bitcoin teather trading pair. Over the last twelve months and particularly in December and the start of this year, what we've seen is an uptick in volume in the Bitcoin USD pair, which is now the most dominant pair, and in addition, a lot of trading activity has shifted to US and UK market hours, So to us, that's one of the clear indications that volume is starting

to shift. And then the last piece I'll add that's important to note is, as many may know, the CME in tween launched a bitcoin derivative market. They have a futures contract and an options contract. In December, the Bitcoin options contract at Semi hit an all time high of one billion in monthly x three, and we're seeing a tremendous amount of up kicking volume on that CME venue.

Whereas historically in the past, the majority of options and derivatives volume had been on crypto native platforms, particularly those based in the Asia Pacific region, we're now starting to see a lot more participation in USD denominated markets tied to the legacy banking system and access by institutions through their existing scms and their existing brokerag providers. How do you take a pair build him, mild him. I mean, you know, obviously we quote bitcoin in terms of it

versus the US dollar. You talk about in versus tether and others. What what are the what are the options I suppose these days? Sure, so tether is a dollar, right, Every tether is equal to a dollar. It's just that the dollar is on a on a blockchain, so it trades natively on chain. It's very similar to the concept of the central bank digital currency, except for central bank issuing it. In this instance, it's a private company issuing

it with the dollars held in reserve and collateral. And really, I think the importance of the shift from tethered to us D is an indication that more of the people who are accessing capital markets in crypto are coming from a bank accounts rather than being crypto native trading firms. So I think that's really the key insight for US there. And in terms of trade pairs, you know, bitcoin is a very deep, very liquid market at this stage three years ago not so deep, not so liquids, and today

it's a twenty four seven global market. UM is quoted primarily in us D, but obviously there are hundreds of trade pairs and various currencies, but the us D trade pair is really the most prominent one, and that's certainly the one we check at our firm. Extraordinary story, Milton, thank you so much for joining us. We really pre getting the update and the update on the assets under management. Uh,

that is just extraordinary. Of the past twelve months. Meltem Demere's chief strategy off for Coin Shares Group just really Vanni just that the growth in and the depth of the marketplace, as Meltem was mentioned to me, that's one of the most oppressive things, the depth of the marketplace. Yeah, I mean, you know, let's not forget a bitcoin itself is up three d thirty percent over the last twelve months, so you know that accounts for for some of that.

But also these are such tremendously volatile assets, Paul, you know, yeah, but as presumably as you talk to the bulls, as this market becomes deeper and broader, uh, and and perhaps more liquid with more players, that becomes a little bit more stable, we'll see, and it's time to talk markets once again. Now let's bring in Brent Shooty, chief Investment Strategies for North will Western Mutual Wealth Management brand. It's been quite a few months. It's been you know, crazy,

crazy times here in United States. The markets those seem to obligely just gone higher and higher, at least equity markets, and you know, more recently we've been getting a bit of a shift in bond markets. What's that's what's the main decision that you've had to make over the last

day four weeks. Well, I think your earlier comments about kind of the markets moving higher and some of the issues that are still out there, I want to point out that the markets discount more into the future, and so the markets are thinking about the end of COVID nine king hopefully and I was getting back onto public and those brighter days ahead in the future. And I think that as you invest money, as you think about

those things. Um, certainly there has been some troubling data out there's been some troubling things happen which have happened in the last four weeks. But from an investment perspective, I think it's important to point out that you always need to be looking ahead, and I think the last four weeks we've had to focus on that quite a bit, making sure that we're looking ahead into hopefully the next few months when the world looks just a bit brighter

and its operating on multiple centers that you're owth. So I guess, in a way to your question, the last four weeks, UM certainly looking at the data, but looking ahead more so. And that's what the market is doing right now. It's looking ahead to what happens in the future, and it's seeing a brighter one ahead, all right, So a brighter outlook ahead. Where are you going? Where are

you allocating capital? Brent Well? So, I think for the last three years, technology growth stocks have been only game in town and kind of ties into my cylinders of growth commentary because I do think next year will be there. This year, I should say, now we're in the new year, um will be the first year in many actually three that we've operated both in the US and the globe

on multiple cylinders of growth. And by that I mean back in two thous eighteen we were kind of introduced to the trade war that was designed to slow global growth, and it was designed to harm manufacturing and exports around the around the world, and that actually had a blowback into the US. And so if you think about it, technology was really unimpacted by that. It was the place of earnings growth. Growth was narrow and the market was narrow.

Those two things were aligned as you look in the one um that hopefully will be off the boil um. So COVID, I should say, also kept that going. COVID actually in the beginning narrowed the economy narrow the market's

technology was kind of the only game in town. And recently you've seen the market broaden out because the economy is brought out, and so we continue to think that's a backrop in That means that things that haven't done as well, like cyclical stocks, like value stocks, like small cap stocks which started doing better in Q four, will continue to do well into the new year. And that's where we're focusing most of our attention on. That's fascinating. So what kind of value plays are out there that

you see them well from a broad perspective. I we we we use broad based et f s and mutual funds for the most part, so we are investing along the lines of just value stocks and some of those sectors that have been harmed a lot. So I think the financial stink energy UM think stocks that are just cheaper than some of the growth stocks that have been um bit up kind of because rates are low and because their story. Stocks with a compelling future. I'm not

suggesting that future doesn't come to fruition. I just think a year when you kind of get back to some of the things are a bit more boring, like perhaps industrials, financials, things where UM things that have been impacted for the past few years because of some of these things that are out there that have kept global growth from hiring on all cylinders, which, as I mentioned before, I think that alleviates so Brent, I guess the you know, one of the issues for a lot of people as a

think about equity markets is market cap. The big cap names you talked about have been such good stories for a long time. And as we broaden out our view, how are you viewing small cap mid cap stocks? Do you do you still see UM? Is there opportunity there? Yes, I mean I think they've certainly. I mean so in the fourth quarter small and mid cap stocks and the indextins we look at we're up twenties four and respectively. I'm not suggesting that large caps aren't a bad story.

I think the SMP was up twelve. So it's not that there isn't still opportunities within some of those other segments. It's just that I think in all in mid cap stocks and value stocks to that matter, have further room to run. Look, growth versus value is at all time extremes, and I think that's been logical for the reasons that I mentioned. But as you think about think about more monetary policies that that is not going to stop. They have to have credibility in the future. They need to

persent inflation. The feds QUEI is designed to make you take risk. Fiscal policymakers are not going to stop UM. You have COVID hopefully alleviating its impact on the rest of the economy. You have an inventory rebuild that has to happen, and you have some pent up demand from consumers who actually UM certainly in the aggregate, have saved money. There's still are people who are in trouble and hopefully stimulist gets them through and then they get jobs back.

But you have an economy that's going to be operating on all cylinders, and to us, that means this recent rotation that we have seen continues in because earnings growth will broaden out and technology won't be the only game in town. And so UM, that's where we're kind of focused. Would you go so far then Brenda's to be short some of these growth stocks, like a test for example. Now, UM, that's not our ore. We are long term investors. We take a long term approach and a long term out,

but we still own large cap stocks. Well, I suppose what I'm really asking is do you think they're going to settle off massively? You may not take a position on it given what you do you know, but but do you think they're going to sell off? No, I don't know that there's a massive sell off out there. And I think, and I've equated this in the past, to let me make a caveat, I don't think things in some of those stocks are anywhere near they were.

There are earnings, there are UM stories that are there that are real versus what I think happened. I'm just suggesting that investors a UM don't lose diversification because I think right now the temptation is high to do so because they've been emboldened by the past and be nudge their portfolios UM in that direction because I think there's the opportunity to add incremental performance above and beyond UM what they would get by just taking you know, a

steady hold, buy and hold kind of perspective. Hey, Brent, thanks so much for joining us again. We always appreciate your perspective. Brent Shooty, chief investment strategist for the Northwestern Mutual Wealth Management giving us his bullish call on the markets for talking about that rotation trade, allocating a little bit more to some of those UM growth I mean the value stories cyclical names, maybe small caps as well. It is time for Bloomberg Opinion. We're joined today by

Jonah Sarah. He's a Bloomberg Opinion columnist joining us. Joe's out with a fascinating column today on a very important topic, and that is what liability should the social media companies like Twitter, like Facebook and others have for the content that appears on their platform. And of course that is absolutely front of in center right here. As President Trump uh has been uh temporarily at least taken off of both Facebook and Twitter for some issues as it relates

to last week's uprising. Uh in the Capital Joe, thanks so much for joining us here. Love to get your thoughts here, UM about this very important topic. UM well, I've pretty brought a question. Um My, my core, my core feeling is that, um, we just should not live in a world where for Silicon Valley bros, you know Tim named Tim and Mark and and and uh Jack and and Sundar get to decide you know, who who gets to be on their platform and who doesn't get to be on their platform, or what kind of speech

I should say, gets to be on their platform. So you know, there's a there's a fundamental problem there that hasn't been solved. And um, you know, Facebook has fifteen thousand content moderators and yet there's still all kinds of hate speech on there. Obviously, this uprising was was in no small part planned on Facebook, um and and Facebook is always behind the curve and trying to get these things.

These things often in many cases leaves demand because they don't violate their terms of service, and we barely know what their terms of service are, so so continue No, no, no, you go, you go your turn, All right, my turn. I was going to say, what responsibility exactly does the likes of Mark Zuckerberg and his company, which is in the private sector, it's not a government company, it's a

private company. How much responsibility does he and the company have? Well, do you mean from a legal standpoint or do you mean from a societal and moral standpoint? From a societal and moral standpoint first, because I imagine some of the reasons we saw these actions being taken in the last few days is actually from a legal standpoint, not from a societal standpoint. But that's you know, opinion aside. I

don't I don't think that's true. You don't think I mean, the key thing is, see, they have no legal liability because of section to thirty of the nineteen Communications Now excuse me, the the Communications Decency Act of So they have no legal responsibility because they are they they have they have immunity. They're just viewed as a platform and anybody can put anything on there and the person who

puts it on has the liability. Now, you know, I think this is a huge, huge problem because it doesn't give these guys any incentive to take off the incendiary kind of uh posts that, on the one hand, are been very damaging to American to our politics, and to our cultural norms. But on the other hand, they drive traffic, they make money for the companies, so the companies don't have a ton of incentive to take that stuff off. Um and, So you know, my argument really is comes

down to this. You know, if you're a farmer company, one of the reasons you want your drugs to work, not the only reasons, but one of them is because if they don't, you're gonna get sued to smithereen and and and that helps keep companies in line. Um and and and if Facebook and Twitter, and Apple and Amazon all had the same um uh, the possibility of of of of lawsuits, it would I believe change the way

they think and act about um about what they have online. Joe, what do you think the appetite is within Washington to eliminate Section to thirty of the Communications Act. I think it's pretty high. Actually, um all the Republicans wanted, although they wanted for a stupid reason. Um. They want it because they think of it as a way to punish the tech companies, especially Facebook and Twitter, because they claim that you know, the conservative views don't get are censored,

which is bologny, which is just bologny. Um uh. But but you know, there are a lot of Democrats who have come around to this, to it too. I mean, it's not it's not a slam dunk, but um uh. There is a sense that something has to change and that you can't keep pounting on Twitter and Spacebook to to do this themselves because they just they don't have the manpower and they don't really have the They're not they don't have the willingness. So um so that's that's

what the issue is. Maybe. I mean, if somebody could figure out a way to modify Section to thirty so it creates some legal liability liability, um without getting rid of it entirely, I think that would be a great solution. Well, here's one for you. Don't go ahead. I mean, it's not unlimited this immunity. It's specifically accept federal criminal liability. So what if someone gets up there and argues that, you know, across states people were planning to meet and

carry out violence on members of Congress last Wednesday? Is that I mean, there's potential federal liability there they there is, absolutely that's a very very narrow slice of the stuff. That's on Twitter and Facebook. That's wrong. Um, for instance, you know you can you can put anti Semitic slurs on their kingdom. Come you can? You could until until this year, you could be a holocaust and I are on Facebook, so you know, and those things. There's there's

no there's no legal liability. The amount of legal liability, you know, is very very narrow for these companies. You're right, if a crime is being planned on Facebook and Facebook don't do anything about it, that's the problem. But but as a general rule, there's no legal liability. Joe, what do you expect the response from Silicon valid to be

to some of this mounting pressure for regulating speech. Well, I think they actually they're not going to be a favorite eliminating to thirty, but they if you actually there's a company called Axios, which I'm sure you've heard of, which is an online site that's very aimed at the water intend movers and shakers. Facebook advertises on that side all the time, and their advertisements always say we want

to be regulated, it needs to be further regulated. What they really want is for the federal government to take this problem off their hands so that there are you know, so that it becomes a government mandate that certain certain speech has to be removed. So they don't they don't feel like, you know, there there it's on them that it's their decision. Um. So actually is the appetite is higher than it's It's higher than you might think. Joe,

it's a great column. There's so much nuance in here, and I urge everybody to rush out there and read Jona Sarah's column today in bloom Reig Opinion. He is, of course that the Jonah Sarah, but he's also a bloom Big opinion columnists these days. Under today's column is revoke social media's shield. But for the right reasons to their Facebook and other platforms won't get serious about cleaning

up content until they face liability. It makes a great point, Paul about how you know it's only now twelve days before the end of the Tom presidency that you know Twitter and Facebook are actually booting him off. You know, it does seem the timing is not lost on a lot of people. Yeah, yeah, it could definitely be a little bit cynical about it. All right, it is time to have a conversation about the climate. And you can

be absolutely sure that under John Kerry. Assuming that he is the next climates are and that that all goes ahead without any problems, we will have a very different approach in this country to climate. Remy really was one of the negotiators for the Paris Climate Agreement and he joins us now. Remy, first of all, what's your anticipation for when John carry takes office and how it will manifest itself. It's a new post hivony hipole Yes from France. Pleasure to be to be with you and to see

the momentum growing in the US behind climate. John ker was the key actor of the Paris Agreement. I clearly remember when I was the chief negotiater on finance back in in twenty fifteen, and so a lot of of course, a lot of expectations to see the US back on board and very active domestically of course, but also on the international stage. So, Remy, give us a sense, as one of the negotiators and architects of the Paris Agreement, why is it so important disagreement for climate change? And

what's really the focus right now for uh this agreement? Well, we all know we have to do our homework in each and every country for energy transition to change the way we invest in housing, but that the emissions are going everywhere and so we we need absolutely need to common framework and way more international cooperation with the Chinese, is, Europeans, with African countries. And that's what the Paris Agreement was about, a common framework with a clear mechanism, with a ratchet

close never expanding ambition. And this is what we will discuss this year in Glasgow by November, headed by the UK Government with CUP twenty six, five years after the Paris Agreement, we will take stock of where we stand and hopefully increase ambition. And that's for the voice of John Kerry, the voice of Brian D's, the voice of Jonathan Pershing, the whole team that is back in business

will be so important. Are they speaking to corporate America, Corporate France, corporate Germany and whatever country you know we might be talking about, or are they actually speaking to the governments. What can governments do? Um An interesting point in the Paris Agreement and the way the French Monment at that time organized the discussion is that it was

not a classic inter governmental UN discussion. We tried to expand and you're financial Radio, so we tried to light up each segment of the financial sectors at that time and then we can measure what is happening. So see what the green ball market became in five years, and we certainly will go away farther in the coming months and years. And so yes, the private sector, private financiers,

private corporations are key in this effort. But you need the instruments to lenk public and private, of course, and that's that's what public development banks are about, remy. One of the first moves from President Trump and his administration was to pull the U S out of the Parish agreement. What were the practical ramifications for that? Uh move? What good news is that it takes two years to really

come out of such an agreement. So the real so there was still the US team in the negotiation for for for the last few years, and since the President elect Biden decided to come back, there will be no no interruption in the US in the negotiation. But of course the decision had a lot of consequence on the on the momentum, and hopefully there was the American pledge with the cities, with NGOs, with corporations taking the home and and doing more and now we expect the government

to come back. So you were just offering us a little opening there. Ramy. You are a chair of the International Development Finance Club, and you just mentioned how you know international banks and into governmental banks are very necessary when it comes to things like climate agreements and so on. How does your International Development Finance Club play a part

in all of this. Well, in the way Europe, Asia, Latin America, Africa developed and is now fighting against climate change and against inequalities, you have at the center of our economic system a public financial body, public development banks. Remember in the US during the thirties you had this Reconstruction Finance Corporation that was the instrument the federal public instruments at the end of President Roosevelt to come out of the crisis. And so we decided last November to

gather them all. There are four hundred and fifty public development banks in the world. It amounts to two point three trillion dollar investments each year, so that's ten percent of global total investments that are public and to work collectively. And so we we are expecting, we are dreaming and

having again us counterpart Senator Mark here. You know so active behind the Green New deal was present at this Finance in Common summit, and he supported the Finance in Common coalition and we will pursue in twenty one and certainly a liaise with all US colleagues to do more Remy, how has the pandemic, the global pandemic, impacted the mission of the Paris Agreement. Uh, well, the pandemic, of course is slowing down international cooperation and that's where it's so

important to rely on national forces. So of course, now we have the global framework, the Paris Agreement, that is still alive and very active and probably more vibrant than in the previous years. But we need to have a lives we need to afforce is, we need to have institutions in each and every constituency. Because the DSDGS, the Sustainable Development Goals, the Paris Agreement, it's not about international affairs.

It's really about the way we produce, the way we consume, the way we live and what we have to change. And you well, we know we have to do it in France. You know you have to do it in the US. And certainly that was part of the debate in the discussion. And now we have to join forces and do it together. Remy Reyou, thank you so much for joining us. Remy Reyu Chair International Development Finance Club, also a Paris Agreement negotiator and UM a vantage to be very eating to see how quickly the U s

re engages in this Paris Agreement. UM when the President elect takes office on January twoine clearly as a big part of uh Mr Biden's campaign to re engage with on a global scale of our partners to fight climate change. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever a podcast platform you prefer. I'm Bonnie Quinn. I'm on Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm on

Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio.