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We talked about this at the top.
Bitcoin not having a great year. It's headed for its fourth annual decline in its history, and the first one that didn't coincide with a major scandal or industry meltdown. So we're talking about cryptocurrencies. The bitcoin specifically now nearly seven percent lower for the year. It's down around thirty percent from its October sixth all time high.
Volumes low and investors.
Tim Bieling a Bitcoin ETFs you know about this, you do a weekly bitcoin show, you know, yeah.
I mean the bear market means that bitcoin has decoupled from stocks, the S and P five hundred closing in at a record earlier this month, up sixteen percent for the year. Bitcoin struggle to find footing. The bitcoin minor and accumulator Mara Holdings knows all too well about the drop. Its own stock down more than thirty six percent so far this year. Nearly twenty eight percent of the float is shorted.
With more.
We head to Paris and to Fred Tealey's chairman and CEO of Mara. Fred, good to have you on the program. The decline in the asset price this year certainly, you know, one hundred and twenty six thousand dollars, that was a major high earlier this year. That was a big moment for the cryptocurrency. But down close to thirty or more than thirty percent from that, How much lower does bitcoin go?
I think your bitcoin at this level is finding support in the kind of eighty four thousand range, which is just.
About where the.
Break even point is on most ETF purchases Bitcoin ETF purchases, and that seems to be a level of support where essentially people large investors who are trying to defend their positions. If you would want to keep it above that level, which if it falls below that, you'd see more sales. M's probably out of the ETFs back into liquidity and bitcoin. It's very much driven by global liquidity. You had the expectations of more from the FED and you know, more
clarity around market structure. But I think what you really have to look at is there was a huge run up in the kind of August through September into October pure period, and you know, a number of us felt the market was frothy in the beginning of Q three and things were getting a little bit overheated, and you know, now we've seen some of that come off.
You've also seen a lot of money.
That rotated into AI now rotating out of AI and starting to rotate into more Dow stocks. And so I think you're generally seeing a risk off environment. Risk off tends to drive people out of bitcoin. But the liquidity that the federal government is going to inject in the marketplace now that quantitative tightening is over, we're starting to see easing again. We believe that will bode well the dollars down, which also bodes well for bitcoin. And I
think you're going to continue to see bitcoin preiate. But you've got to realize it's a very large acid class. It's a couple of trillion dollars in size, and it takes a lot to move the price. And I think what we're seeing now is just some healthyber tracement.
Hey, if I may just jump in for a moment, you know, I am wondering, Fred, you say that it's it's a risk off environment, and yet I'm looking at an S and P five hundred that's still near its all time high, you know, and we've seen quite a bounce back when it comes to the S and P five hundred also a very big market. So I'm just curious, you know, how do you square that if we're seeing investors still willing to move into the equity markets but not crypto that disconnect.
Well, I think you have to in regards to crypto, you have to look at the derivatives market, which is much bigger than the actual spotpit coin market, and you have to see the sheer amount of leverage and positions
that have come off since the peak. You know, you've gone from the ninety billion dollars range down to the thirty billion dollars range of open positions, and so that's a huge amount of leverage that comes off, which essentially sucks wind out of the marketplace, and people have been moving their money out of bitcoin and into other things.
I think you've also seen look at the AI stocks.
Most of the second tiery AI stalks have all seen a pretty large come down since the peak, even stocks such as Oracle, look at Core, We've you know, look at these stocks and how they've performed, and I think what you're seeing is a rotation out of some of those and into other stocks. And bitcoin is associated with technology, it's associated with the risk on assets and it's very associated with liquidity.
So having said that, and you talked about the run up that we saw earlier in terms of crypto, that where it got to maybe like frothy levels. We're now at what eighty seven thousand and eighty seven thousand, three hundred and two and change. So what do you think should be the level of crypto that makes more sense?
I think you have to look at the long term trend, but more importantly, go back a little over a year ago, go fourteen fifteen months ago, no US money center bank would deal with crypto related companies, nor would they take crypto deposits, nor would they let you trade crypto, nor would they let you wire money to crypto exchanges. Almost and today you have every bank, including JP Morgan, now moving ahead and doing all sorts of things with crypto.
You're seeing tokenization of assets. DTCC has now gotten a no action letter from the SEC around tokenizing assets. You're seeing all sorts of activities around the traditional finance environment where they're embracing crypto. And I believe that what part of the effect of that is you're now going to see all sorts of things wrapped around crypto which will make the space much more relevant.
But it takes time for those products to take effect get launched.
And I think again, bitcoin has had a great run, you know, over the past fifteen years. It's been one of the best performing assets on record, and I think that we're going to continue to see great performance out of bitcoin over the coming years.
So, Fred, you're a bitcoin minor, you're also a bitcoin accumulator. We've spoken to Eric Trump of American Bitcoin and I'm curious he's also a minor, also an accumulator. What makes your company different than American Bitcoin.
Well, any company that minds bitcoin is performing the exact same service for the bitcoin network, which is essentially assembling transactions into blocks and then competing to win the right to essentially add that block to the blockchain. What differentiates Mara from American Bitcoin. A. We own all our rather, we own about seventy percent of our hosting operations. We're
fully vertically integrated. We own power generation, We generate energy off of wind farms, off of flare gas and oil fields. We operate on four continents. We also are fully vertically integrated from a technology perspective. We operate our own pool. We co founded the only US ACIK manufacturer for bitcoin mining A six. The rest of the market is all dominated by Chinese companies, and we have been very proactive in helping drive a lot of the growth of crypto
around partnerships with energy companies. And I think you know, we're still considerably larger than American Bitcoin, not just in our mining operations, but also in the amount of bitcoin that we hold in our balance sheet.
On the identity part of this, trying to understand what the company looks like. You guys issouldven this week saying you're not a digital asset treasury firm, so you should not be excluded from MSCI, whereas the company said it has been adopting a bitcoin treasury strategy by holding its mind coins. What is the difference between being a treasury company versus a company that adopts the treasury strategy. Help us with the nuance there.
Sure, so, a bitcoin treasury company, for example, like Strategy or micro Strategy as it's formerly known as, has acquired all of its bitcoin by purchasing it.
Mara has mined the majority of its bitcoin.
We've also purchased bitcoin in the market, but most of our bitcoin is the product of our mining operations. We have chosen to hold our liquid assets in bitcoin because we believe again better to hold our cash in the best performing asset class over the past fifteen years than to hold it in fiat, which is continued in losing its value, or just to hold it in treasuries, which will only you know, pay a dividend of you know,
the low single digit percentage points. So bitcoin has been an excellent place for us to hold our cash and we'll continue to be so, we believe over the long run. But we generate bitcoin by mining bitcoin. We're not out in the market buying bitcoin on a regular basis like micro strategy. We have from time to time gone into the market and bought it when we think it's very opportune.
Last year, there was an opportunity to buy bitcoin when it was in the sixty ish thousand dollar range, and we bought bitcoin because we had a feeling it was a belief allow that it was going to go up, which it did. And there are times where we're opportunistic like that. But we sell bitcoin that we produce to fund our operating expenses. So you know, we are not a company that holds our bitcoin. Every single bitcoin that we have. We actually sell bigcoin from production to fund
our business. So we're an operating business. Bitcoin mining is our primary business, and bitcoin just happens to be how we hold our funds.
Fred One thing I'm just curious though, going back to what you've seen in terms of the fatigue in the price and bitcoin coming down. You know what's interesting is and I'm just looking at some of our reporting and commentary. You know, you've got a White House that's very much favored or favoring the digital currency world. You have the President declaring crypto a national priority. US Congress has passed a landmark stable coin legislation, and bitcoin exchange traded funds
were raking in billions of dollars. You know, we've seen acquisitions, We've seen so much movement, and again I'm going back to the decline that we've seen in crypto. You it's a pretty favorable environment. So, I mean, is all of the good expectations in terms of news already priced in and it can't get.
Much better now.
I think, like anything, any asset will revert to mean, and bitcoin is simply reverted to mean. It has most probably over corrected. But you had in the past six months, a huge amount of accumulation by the plethora of digital asset treasury companies that were formed, you know, and the you go back not too long ago, it was basically MicroStrategy was the only real one you had met a planet. To a lesser extent, similar scientific was a smaller one, and we were a large holder of bitcoin.
That was kind of it.
And then all of a sudden you had all sorts of companies come out of the would work.
What did they do?
They raised cash, They went and bought a bunch of bitcoin, which drives the price up. Price comes up, people start putting money into ETFs. You start getting bigger derivative positions. It's a flywheel effect. And if you just draw a trend line over the past number of years, you'll see bitcoin.
It's just perverted.
The meme got to run, Fred, Thank you so much. Fred Tiel, Chairman and CE of Mahra