00:00Now, to mention cryptocurrency, let's take a look at Bitcoin prices, even by Bitcoin standard.
00:06It's been an exciting year, recovering a little now, up about 1%, about $86,800 at the moment.
00:14Ether also somewhat higher, but Bitcoin is on track now for its first annual loss since 2022.
00:22Let's get a little bit more on the outlook for crypto markets.
00:25We're joined by Hassan Ahmed, Singapore CEO and country director at Coinbase, the biggest crypto exchange in the U.S.
00:32Hassan, thanks so much for joining us.
00:34And I just want to see if you can answer this question for me.
00:37I mean, who's selling?
00:39Because the true believers, the so-called OGs, typically don't.
00:43Or do they?
00:44There's some research from K33 showing that some of those long-term holders have decided this is a good time to cash out.
00:52Thanks for having me, Paul.
00:53This has indeed been an exciting year for the cryptocurrency markets.
00:57We've seen a lot of fundamental improvements across both the asset class level as well as the technology level.
01:03For Bitcoin in particular, you're right.
01:05We have seen a rotation, which is to be expected, of initial holders who are mostly retail buyers, who frankly have held for a long time.
01:15And so, you know, when you're up 1,000x, 10,000x, I think it is natural to see some of that distribution to start to take root.
01:25Part of the reason why we think that it's happening now is because the market structure has changed.
01:30Institutions have come in in a big way.
01:32ETF inflows of $58 billion over the last two years really kind of point to the market maturing and the holder-based maturing.
01:39And that's sort of where they have been selling into.
01:43Is the market maturing, though, because it's incredibly volatile and we often hear Bitcoin referred to as digital gold.
01:49It certainly does not behave like gold.
01:51And if you go on some of these social media platforms where the cryptocurrency is discussed,
01:56it's all sorts of crazy reasons are being given for the behavior.
02:00Can anyone say for sure what's happening with this asset?
02:03Well, what we know if you look at the numbers is that Bitcoin, in particular, has been reducing its volatility profile.
02:13So today or this year, on average, the implied volatility is roughly of what you would see from a high-growth tech stock, around 35% to 40%.
02:20And this is down from where it used to be closer to like 150% last cycle.
02:26So we do see it maturing as an asset.
02:28We do see a lot of institutional bid that's continuing to come in.
02:33You know, many big names, you know, such as Harvard Management Company recently also announced that they took a big stake in it.
02:38And we also think that there is a debasement, you know, currency thesis for part of the reason why institutions are continuing to come in.
02:48Well, can you talk to me a little bit about what the volatility has meant for Coinbase?
02:53Does this improve profitability for you?
02:55Yeah, we're building for the long term.
02:59We're trying to provide access to both being able to trade and buy and sell all sorts of cryptocurrencies.
03:06And then we're also looking to increase the utility of these assets, in particular with stablecoins, which are starting to really work their way into the plumbing of Morton Finance.
03:17And so that's something that we're building across really, you know, all parts of our products.
03:23For the volatility in particular, you know, the market sort of, you know, will do what it does.
03:29Sometimes it does sort of encourage, you know, more speculative activity.
03:34But as we saw with October 10th, for example, a lot of offshore exchanges did see large de-leveraging.
03:41But because we've been building trusted, robust infrastructure, we were not as impacted.
03:45So that did result in inflows on our platform.
03:49So where's Coinbase planning to expand in the Asia-Pacific in 2026?
03:54Well, we had a very big product announcement this morning where we talked about some of the big product expansions that we're planning in the U.S., including offering access to equities, equity perpetuals, prediction markets, and a few other things.
04:13In Asia-Pacific, we've been, you know, quite encouraged by the activity that we see over here.
04:17We've had our license in Singapore for the last two and a half years.
04:20We're on track for our AFSL licensing as well.
04:24And we're looking at sort of many markets, you know, around, not just in Asia-Pacific, but worldwide.
04:32And Coinbase recently increased its investment in iCoin DXC in India.
04:38Sorry, DCX.
04:40What are your plans in India?
04:41Can you tell us a little bit more about that?
04:44Yeah, we're excited that that investment was, you know, formally blessed.
04:49Over the past 24 hours by the regulator.
04:53India is a very exciting market.
04:55There's a lot of crypto adoption over there.
04:57It's also a very tech-forward market.
04:59So we see a lot of strong developer talent in the market as well.
05:02We have our FIU registration as of this summer and are continuing to work to increase regulatory clarity in that market so that it can set the stage for the whole industry.
05:12I'm just wondering also if you can give us a target for Bitcoin in 2026.
05:18It's going to end this year on a rare down note.
05:22Where do you see things heading next year?
05:26I think that the market structure still has a lot of momentum in it.
05:30What we saw in the last two months was what I would consider a positioning reset, you know, as a result of these distributions and some of the deleveraging events that happened.
05:39But the macro environment has been, you know, quietly improving.
05:42And when we look forward to sort of the increase in, you know, money supply and just, you know, the Fed quantitative easing starting to take root, Bitcoin really is a macro asset and responds, you know, very well to these kinds of changes.
05:55So overall, we remain optimistic that this is not a sort of late-stage cycle behavior.
06:01This is not a kind of four-year cycle coming to an end.
06:03We think that that sort of trend has sort of played out and really long-term, you know, holders are starting to come back into the market.
06:12So we're expecting it to be, you know, cautiously bullish for the next year.
06:18Now, you're also expecting to launch some tokenized equities.
06:22Do you have a timeline on when that's going to happen?
06:26Tokenized equities are a very exciting topic going into next year.
06:30So this is something that even if you look at recent comments from, you know, Chair Atkins, the U.S. is looking to modernize its whole infrastructure around trading.
06:40And tokenization is a big part of that to enable 24-7 trading for equities.
06:46You know, ourselves and a few other industry players are having conversations on, you know, what could that look like and what could innovation exemptions look like so we could bring that to market.
06:55Now, I just also want to get your views on some developments we heard today out of Robinhood.
07:01We'll talk a little bit about that later.
07:03But Coinbase is also early today.
07:05It's going to get into prediction markets and stock trading as well.
07:09Can you tell us a little bit more about your aspirations for these products?
07:14Absolutely.
07:15We are looking to really build out this construct called an everything exchange.
07:20So you can come to Coinbase as your one-stop shop for all of your trading needs and also to act as your primary financial account.
07:29So we have been busy this year, you know, heads down, building out a lot of these verticals and expanding our product portfolio so we can provide this breadth of solutions, you know, at the same place.
07:42So this morning we announced that we will be launching traditional equities in the U.S. along with prediction markets, which will be sort of available for our U.S. users really as of today.
07:54And that's really exciting because what we've seen in the last year or so is that prediction markets in particular have really found product market fit.
08:03And they're providing a lot of signal, you know, in terms of what is actually happening and where political trends are going, you know, things like sort of sports betting and so on.
08:13So where this really kind of brings us is that, you know, a lot of the financial system is going to be upgraded with blockchains.
08:23But at the same time, there are other asset classes that we think that we can play a role in modernizing as well.
08:28So prediction markets are starting up in the U.S. Do you see them coming to international markets as well?
08:37Yeah, we want to build trusted infrastructure and provide regulated products out of our custodial offerings.
08:43So we are taking it on a case by case basis and working closely with regulators to ensure that we have something that is not just sort of a rushed launch, but something that can be sustainable over the long term.
08:54So we'll have more to announce over the coming weeks.
08:57I can say, though, that the base app, which is our non-custodial offering, is available across 140 countries, including Singapore and most of our Asia-Pacific markets as well.
09:09Well, this is something your competitors are also looking at, also prediction markets.
09:13How are you going to compete in this space?
09:15It's still early days.
09:20You know, we're seeing an explosion in volume and just a lot of demand to really come in and take positions on these kinds of markets.
09:28There's, you know, some early, you know, winners or, you know, companies that we're looking to partner with to really learn more and see what more we want to do here.
09:38But what we just see is a sort of a longer term trend on, you know, what exactly this is going to shape.
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