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Welcome to the Merin Talks Money Weekly round up, our deprie from the biggest stories in markets and economics. I'm Merrin Sumsetweb Editor at Large for Bloomberg UK Wealth and oh no, you can increase yourself John and I'm.
Joined Stepics, senior reporter and authors the Money Distilled newsletter. Soon to go behind the paywall as well, so sign up for Bloomberg dot com.
Yeah, we're both going to be behind the paywall, and I also be able to listen to the podcast.
By the way, that we're not going to charge you for. But if you want to read our written words.
Of wisdom, you are going to have to be a sign up to Bloomberg. So you can see that in the show notes. As I said earlier, now, John John, John, Johnjohn, you haven't got any cryptocurrency, have you?
Nothing? Not a single token, not a penny in it. Nothing.
Actually, actually, actually, I do have some obscure thing called bitcoin cash. The Mutual friend Dominic sent to me okay, services rendered at one point.
Oh, we'll talk about that offline. Fascinating.
Yeah, this is my.
Way of leading us into the fact that we have got to talk about cryptocurrencies today. We've we flagged in this very show only last week that the re election of Donald Trump was going to be excellent news for bitcoin and for cryptocurrencies in general. Now we're speaking in the middle of the week and bitcoin search has paused, maybe for a while, maybe not for a while, but it's se a huge thirty percent jump in value as a result of Trump's rhetorical support for crypto.
He's been talking about it a lot.
It's currently valued at around eighty six five hundred dollars. But of course it's not the only cryptocurrency enjoying something of a boost. Doge coin, dog cooin, help me out here.
I think doruge thanks doors.
Doge Yeah, yeah, doge coin, which by the way, I own, has seen an eighty percent increase in the past five days, partly due to billionaire Elon musk promotion of the token. It's now considered one of the strongest performers in crypto. And I will just add that I did say I own some dogecoin, and I do, but I have recently checked my coin based account and my dogecoin is current worth ten pounds and forty two pence. It's gonna really need to move from here to drive my retirement, right.
I mean, it's a coin, and that is a so that's pretty good.
Yeah, no, it is.
But you know, I mean, I know it's a joke coin, and I bought it as a joke, as you, mainly to irritate by my husband. But kind of the joke's on me giving it certainly work worth just over a tanner right now, one day, John, one day, my bitcoin
is worth a little more my insurance bitcoin. Now we are both getting into quite a lot of trouble on Twitter in general, because every time I write anything about bitcoin, I get hoardes and hordes and hordes of replies from the crypto bros telling me how stupid I am, telling me how stupid you are, sorry, John, and how useless we are not to have educated ourselves earlier, and how one way, one day we will understand if we would only come for this subject with a little more humility
and have more expert guests on. And they keep recommending experts to me, this expert, that ex I am not sure that you people really understand the difference between an expert and a siloed idea logue.
You know, Yeah, there's a certain cultishness about bitcoin. And the one reason that I actually have, if I'm one hundred percent, was to have a slight soft spot for it is because this reminds me of almost exactly what the gold bugs were like in the early two thousands. And at that point, you know, when we were writing about gold, it was something that the mainstream media wouldn't
touch by a ten foot bar's pole. And you know, you couldn't find an IFA or certainly not a respectable wealthy managers who would even give gold space in their portfolio, whereas today they all say, yeah, have five ten percent of your portfolio and gold that's a decent diversifier blah blah blah. So you know, there's a bit of me that so sees remembers that and sees where some of the frustration comes from.
And we should actually note with that in mind, that that a deutsch Bank has just put a long term asset return to study lessons from the first quarter center of the millennium in which they point out that gold has performed better than the US secuity marketer over the first twenty five years of the of the millennium.
Yeah, I mean, I mean that's really interesting, if you know, because in two thousand, if you'd said the asset to buy and hold right now is gold over.
Which we did by the way, which we did.
Well, Yeah, I guess good point, just saying well it did and it has over performed since then. And that's that's kind of fascinating in the all of itself. Employee speaks to, you know, balance sheets and then the funny kind of way, I guess beckcoin is actually an offshoot of that world which has been very kind to gold.
It's a world where faith and the financial system, the size of government bound shoots the central bank bound cheat says, can shut up, so that the two have got there's a certain sort of relationship there, but it's never good to be cultishly invested in any asset.
I'm if I'm fair to our audience, I would say maybe I've historically been a little cultures about gold, but I never regret it. Right, Let's talk. Let's talk to me a lot better than our value. Stock got to say. Let's talk a little bit about why this has happened. I mean, obviously it's a lot about the election. It's not about Donald Trump, about the the likelihood of a crypto friendly government across the board. We're like to see
some new cryptocurrency friendly legislation. There's almost nothing here that appears to be negative to the cryptocurrency market. It's total capitalization. Market capitalization is hid in all time high. We've seen extraordinary levels of activity. Another a stat from Deutsche Bank here twenty for our trading volume exceeding four hundred dollars. So you've got a lot going on here.
Than silver though in terms of market yes, I saw that.
I saw that, Mart Okay, So there's lots of things that could happen here.
We'll have more regularly claratory we'll have more institutional participation, presumably as a result of this regulatory clarity, so we can expect even more money to pour into bitcoin. ETFs will have a better infrastructure, and maybe we'll see a broader adoption of cryptocurrencies among not just the institutional but also the retail market.
So there's that.
We've also got and momentum behind it. We've got possibly lower interest rates coming, and that's good for everything. Everything growthy and bitcoin tends to move alongside growth. And then the final thing, which you mentioned briefly earlier, is ded dollarization, fast raising debt, general global tensions. If you think of crypto a bit like you think of gold, then it's going to be in there. And here's another fascinating stat for you again, I'm pulling this out of Deutsche Bank.
I think it's really interesting. The bricks nations now conduct twenty eight percent of cross border crypto currency transactions. So that suggests that it really is important that cryptocurrencies are facilitating global economic flows, international emissionss, etcetera. In a way that we hadn't We have talked about it on this podcast,
by the way. We had lengthy conversations, did we which guess it was we had on who talked to us her a lot about the way that cryptocurrency is, and bitcoin in particular a use for economic transfers res across the third world.
Was that limb Yeah, the one that keeping that we should have oin and who we have had Oin?
Yes, the person people keep telling us we should definitely have Lynen and I keep saying no, but we had Lenon and leaves them going, well, then why don't you understand that she was really good, very very good.
Yeah, very good.
Anyway, So all these things, So, John, does this lead you rushing out now to buy bitcoin and accepting that you and I and Be in particular have been completely wrong on bitcoin ever since that tweet that I wrote that thank you tech bros For dragging up back in twenty eleven where I said that bitcoin at twenty eight dollars was a mania.
I mean it was a mania at the time.
It's been through a number of manias, and Bitcoin's been through at least two major bubbles and busts now, and it's sort right that Matthew and bitcoin hasn't changed. I think it's a real thing. I think it has a use case. I just don't know how to value it, and I think the valuation is largely driven by flows, which is, you know, very indicative of the era that
we're in. Pretty much every asset valuation is driven more so flows have become much more important than fundamentals, and I don't know when or if that's going to change, you know, I wish I had the wind that when I frustrated by it in like twenty fifteen, in.
My stupid We've both been there.
So you know I would I would probably at least have sold it at some point and bought a small car with it, you know, but I like to think that I could be a millionaire.
Bitt this point that that is the important thing to remember. Everyone, the likes of you and me, John say, well, I wish we bought this point. I wihould put at this point, I we should bought at this point, we forget.
That we would have sold it.
Yeah, we would not still be holding it now and we'd be living with that kind of seller's regret, and we would then almost definitely buy in at the top of everything.
All we pull an Isaac Newton for absolutely certain the sea bubble thing.
We would that would not be shameful, you like her.
I compared this to Isaac Newton.
I did. I really, I really appreciated that. Thank you.
Now listen, there's something that I that I wanted to talk about, which is the possibility. And I'm not saying this because I don't have very much bitcoin. There is a possibility that is beginning to be discussed that Trump's regulatory regime may be very crypto positive, but not necessarily bitcoin bitcoin positive. And I've been talking to Russell Russell Napier, the financial historian and founder of the Library of Mistakes, who we've had on the podcast before, and we talked
to and about a reasonable amount about this. He makes a very good point. He says, look, bitcoin is a portal that allows savers to avoid measures that push savings towards funding national investments. Trump is a nationalist. He's going to want to use national savings for what he perceives to be the national good. So maybe that's going to make him move away from bitcoin slightly towards other, well not other, but actual stable coins.
Now they're the opposite.
They're back to usually by short term treasury securities, and they attract funds into the dollars, into the US government, so they may turn into not just a means of transaction for Americans, but also a store of value for foreigners who don't have easy access to dollar deposits, So that not only brings funds into the dollar, but also provides funds that Trump may be able to direct to
what he considers to be the national good. So there's there is a difference here between bitcoin and stable coins. So when we talk about crypto, we have to remember that crypto isn't one great big mass. It may be that we now move into an era where all the things that we have that people have discussed with us on the podcast about the things that are good about crypto in general, changing changing the way companies run, changing the way various legal processes run, changing the way the
infrastructure of finance is run. That may turn out to be the key thing under Trump as opposed to bitcoin itself.
I suppose that's the interesting thing. And this, I mean, this is one reason you know, obviously the cryptos of the thing, because stable currencies are stable coins are the thing that actually worry governments, and they're the reason that we're getting central bank digital currencies cbdc's because the fundamentally the government cannot have the private sector taken over or taking a large chunk of the currency business. That's basically
you know that and you've pointed this out before. Governments have always made sure that the monopoly, in fact those with monarchs as well, the monopoly and currency issuance must always be with the leaders of the country, basically, and crypto has posed a threat to that, and that's why
central banks and the bis have taken it seriously. And you're right, and I think the risk here is that the sort of ideological underpinnings of bitcoin and crypto specifically we're all about essentially escaping from government control of currencies, and the irony of ironies, as always says, is that, as you say, maybe Trump is the one to mainstream them, and maybe mainstreams them by making you know, bitcoin a reserve aset that backs the staple coin version of the dollar.
Type of thing.
You know, he sort of brings it into, you know, under the control of you know, a kind of essentialized kind of power. And I realize a lot of people will be spitting out their tea when they hear that, But that's kind of you know, if you're excited the black Rock have launched that, you know, an etf owning bitcoin, et cetera.
And then then you're not really yes, I mean, you're not there with the original purpose of bitcoin. You know, it's supposed to be more on a transaction currency that has not happened, and it's long been taken over by other things, and that they're supposed to be a store of value, and you can't really call it that because of the volatility. I mean, you can say it's gone up in value, but that's not the same as being
a store of value, is it. And of course there's this idea that it was supposed to operate outside the system, and I was, it's now being pulled deeper and deeper into the system. And one thing I might add to that, by the way, is it in the general abuse I get on Twitter as next tech bros. The general abuse I get on Twitter a lot. A lot of it is about, well, you know, if Larry Fink thinks it's an asset class, then you should think it's a NAS class too, and do you know what's wrong with you?
Et cetera.
And the point I would say to that is that just because big institutions launch vehicles that allow you to invest in a product, does not mean that they have a particular belief in the long term value of that product of that acid class. Simply that all products in which you invest make big institutions money. So you know, obviously, if you're going to set up a Bitcoin ETF, you assume the bitcoin has got strong some longevity. But it's not a vote of confidence in its long term value.
It's a vote of confidence in the fees that you can gather from creating a vehicle in which other people can invest in. I mean, it's different, it's different, So please everyone stops sending me tweets saying that it was good enough for black crockets should be good enough for me.
They only I mean, from a practical point of view, I think that the best approach to investing in bitcoin that I have seen is probably Charlie Morris's Bold, and.
I think we can probably say to that before you tell us what boulders, I think I will also say everyone telling us on Twitter to get Charlie Morrison, he's.
Been on john't remind us what bold is.
Basically, Charlie's get this mix where it's it's something like it's the proportions vary, but it's a big chunk of gold.
With a little chunk of bitcoin.
And the great thing about it is that because they kind of have similarities, but they also have differenceies, so when one's going up, the others going down in vice versa. But also it smooth at the volatility, and I think
it's returned. I could be completely wrong in this because I don't have the figure in front of me, but I think it's about eighty percent this year, which is much better than you know, it's it's not as good as holding bitcoin by itself, but at the same time, there's no point at which you've been looking at your portfolio going oh my god and kind of like sobbing and worrying that you can be able to pay your mortgage that.
Week or whatever.
So you know that's that's eighty percent is quite respectable. And Charlie's been banging the drum on this for years now, and think he's pretty much the only person I can think of certainly that's talked about it in that respect. And he definitely understands bitcoin for anyone who is, you know, that way inclined.
So no, I think his approach is the best.
Do you mean he doesn't need to educate himself.
He doesn't need to educate himself, and obviously with more humility. Yeah, humility is the first world that springs to mind when I think you.
Okay, but that's interesting.
So anyone who hasn't listened to the episode that we did with Charlie, do go back and listen to listen to it again.
It's very interesting.
Some of us very kindly, just as showed me Childie's most recent update. And so Bold has with on fifty six percent, which is better than gold and not as good as bitcoin.
Yeah.
God, I take that, though, wouldn't you.
I would take fifty six percent.
Crypto has done very well. Gold has done very well. Crypto has done better.
You could have done pretty well by having both. You may think that the future is very certain for bitcoin, given that Trump appears to be a backer of bitcoin, but there are all sorts of dynamics out there that you don't and we don't yet fully understand. The future is never certain anything else about John.
No said obviously all complaints to somewhere.
They also went to oh absolutely, and particularly about bitcoin, particularly about bitcoin. And by the way, one one last thing, it might still be a mania might be who knows.
Thanks for listening. To this week's Merin Talks Money Debrief.
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