Markets in 3 Minutes: Crypto Rally Will Run Out of Steam

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Watch Markets in 3 Minutes: Crypto Rally Will Run Out of Steam - Bloomberg on Dailymotion

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00:00Our Markets Live executive editor, Mark Cudmore. Mark, we've got a bit of a bounce in crypto going

00:05on this morning. That's after a bit of a sell off earlier on in the week. Are you more convinced

00:10by the bounce than you were by the sell off or vice versa? I mean, does this tell us anything

00:14about the overall picture for risk assets? I'm not convinced that crypto is back into a bull

00:23market. Our colleague, Conor Cooper on my team put out an extremely bullish macro view yesterday

00:28saying we'll be back at fresh record highs soon. I signed off on its publication, even

00:33though I thought he was going to be completely wrong and ridiculous because it was a well

00:37argued view and that's all I really care about. But ultimately, I think he's going to be wrong

00:41on this one. I think that this crypto bounce, you know, we talked yesterday about micro strategy

00:47statement provide a little bit of relief to the market. That's fed through quite strongly,

00:50but we're not seeing that the full kind of enthusiasm there are not in the volume. So

00:53I kind of think that this probably runs out of steam by the weekend. I still think that

00:58the digital asset treasury companies are going to weigh on the sector overall, even

01:03if strategy has got a bit of relief and that crypto is still going to be a negative going

01:06into Christmas. I read that piece a couple of times just to kind of get my head around

01:11it and figure out what was going on. But the basis of it seemed to be the Fed's going to

01:16cut rates and everything's going to be all right. Everything seems to come down to the

01:21Fed cutting rates and quite a lot. And I'm wondering whether that's the truth of the matter

01:26really here. Is that what everything seems to hang on? It seems that all asset classes

01:29seem to be kind of on tenterhooks waiting to see what the Fed does.

01:35Yeah, I think that there's two different dynamics here. This is one of the reasons why I disagree

01:39with the conclusion. As I said, Bitcoin's 10 percent higher since Conor published the piece.

01:45So I'm clearly on the back foot here. But, you know, I think that the idea that we've got a Fed,

01:50which is going to be too easy monetary policy relative to orthodox economics, is a negative

01:56for the dollar. It's a negative for fiat currencies. And ultimately, that's a positive

02:00for Bitcoin. My issue here is the timeframes. I think that's a reason why crypto might have

02:06another boom cycle in it. I just think that the current bust is far from exhausted. And

02:10I actually think there's significantly more downside in the next couple of months ahead

02:14before we get to another boom cycle. So I think the timeframes are mismatched there.

02:17Is everything based around the Fed? Yes. I think it's a large part of the positives here.

02:23The theme here, the Fed is just one angle of the fact that we've got a U.S. administration

02:27which is very, very focused on getting the market significantly stronger by the midterms

02:32next year. And the Fed is a large part of that. They're juicing asset prices.

02:38OK. Mark, how are you thinking about AI and its macro impact? Because we've had a lot of

02:43conversations around this desk about whether this is deflationary, because jobs might go,

02:47or whether there's an inflationary dynamic because of all the capex that's taking place.

02:51How are you thinking about this?

02:54I think because the capex, it's inflationary for financial assets. Again, that is something

02:59that's been facilitated by the easier monetary policy. And the rest of the policies pro that

03:04kind of capex, their ability to write off research from the administration. So it's inflationary from

03:09an asset price. What the impact will be on the real economy is still yet to be decided.

03:14And, you know, we're not sure we're going to get the full productivity boom through.

03:18Theoretically, it could be deflationary. But I just don't think we can reach a strong conclusion

03:23from that just yet.

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