Bitcoin Breaking Out of its Tight Trading Range 'Hinges on Liquidity': Strategist

Bitcoin topped $30,000 this morning as the market continues to digest weaker than expected trade numbers out of China for July and while it awaits for us, data scheduled inflation does scheduled for release this week. Oh, joining us now to discuss the markets is crypto, no tasty crypto head or head or tasty crypto. Ryan Grace. Brian. Welcome. Hey, good morning. Thank you for having me on the show. Still trying to absorb this whole idea is like, is you, is you, do you have a tasty crypto head? Is it like, how does this work anyway? Is it like lettuce anyway? Uh So we, of course, uh we see Bitcoin uh it, it finally broke above $30,000. Um This has been a tight range for a while, right? We've been sitting around 29 30 for quite some time. II I, how long are we gonna be here? Is there gonna, what's gonna move the needle? Yeah, I think ultimately what's gonna move the needle is the liquidity impulse is probably a shift in the market's view as to what the fed does next? You know, there's still some uncertainty there. Are we going to see another hike or not right now, fed funds isn't necessarily pricing that in, but some data points could change that. Um We have seen inflation come down backward looking. And I think, you know, the the market is encouraged about that. But ultimately, I think long term, it's going to really rely on more stimulus, not just out of the FED, but, but globally um given, you know, I think when you look at Bitcoin, you know, how it tends to behave or how it's viewed as kind of digital gold in a sense. So I think largely it hinges on liquidity, but there's so many positive catalysts throughout this bear market that I think we can get excited about that, you know, really help to establish a strong foundation here and, and maybe that's why we haven't gone lower. Um We've only traded sideways but what's not trading sideways, of course, is volatility. I and uh you know, I, I actually took a look at the, at the money vs uh yesterday. Uh and it's pretty low. You see it as this, you said this is the lowest it's been in four years. I mean, it's, it's, this has been incredibly low the at the money. Um there was a slight ps uh spike up, of course, uh back in June when you had the uh the ETF filing. But other than that, this has been a steady progression downwards. Um Does that change at all? I mean, are we starting to see Bitcoin becoming almost uh a normal asset? Yeah, you know, I think over time as the asset class matures, this is exactly what you would expect to see. You would expect to see volatility implied volatility in there as well come down. Um, you know, for a variety of reasons. Now, when we look at this historically, uh across assets, volatility tends to be mean reverting. So I don't think that we stay at this extremely low levels and at these levels, there might be an opportunity but uh it has come down quite a bit from the 100 to 150 levels or vas that we've seen in the past talking about implied vas, implied vowels are or historic. Vas uh I'm talking about both really but implied ball. Um If we look at the Bit ball index, a 30 day, implied ball is gonna be around 40% or it was last I checked, I think the low in there is 37. Um, when I look at realized fall even lower, um I haven't looked at it this morning but that we've been trading with a 20 handle 25% or so, um, was the low in there. And so I think you will see that mean revert. It doesn't necessarily mean that Bitcoin Ball is gonna go back to 100 anytime soon, but it's certainly something to be aware of. And you know what I love about crypto is that you have this kind of inverse relationship. And it's a bit counterintuitive to what you see across traditional assets where that volatility spike often comes with an upside move in the underlying spot price. And I think you could again see that, I just don't know what the catalyst is for it here on the horizon as we've traded sideways. Really for the last few months. Let's talk about some other news we haven't brought up on the show just yet. Coin base announced base its layer two Blockchain um is now available this morning. Several announcements are coming out from different parts of the industry. Uh in regards to partnerships, talk to us about what this means for markets. D five markets in particular. Yeah, I think it certainly extremely exciting for coin base. I think when I first heard of this news, um you can kind of see their, their vision. I would expect others to go down this route as well. But I think this is maybe the next catalyst to bring a lot of people that are in crypto but aren't necessarily in D I or aren't necessarily on chain to these applications where today, you know, for the most part, there's still that technical barrier to participating in decentralized applications to swapping out of deck. It's not that difficult, but for the average user, there's a lot of steps that you have to take, right? I might have to first send my assets off exchange to a self custody wallet might have to bridge to an L two. I then have to connect to the protocol, understand how to use that protocol with base. This is going to almost vertically integrate a lot more of those activities and keep that user within the coin based ecosystem. So ultimately, it's going to be a lot easier for somebody that has a Coinbase account to maybe provide liquidity to a decentralized exchange like Unis swap. And I think that given the use cases that exist out there, you'll see more utility, you'll see more developers come to this as well. And ultimately, it's, it's really beneficial for D I and or for crypto. Does it come with a risk though? Because of course, you, you, you had this situation with bald, uh you know, that rug pull that happened with bald a few, a few weeks, a couple of weeks ago. And then also too, I mean, bridges have been notorious for being these sort of uh uh ways in for people to, to hack and cause all sorts of havoc here. Um I I is this a risk to the, to, to coin base the company itself by being associated with something like this? You know, I think there's definitely risks obviously with kind of the early stage technology and, and where we are in the grand scheme of things, there's certainly a risk associated with that. I don't know how much of a risk it is to coin base as a company given that, you know, I think the biggest risk to them right now is still regulatory risk. Um, and, and the sec lawsuit. So that's ongoing. Um There is again the technical risk with the, the chain and you've seen, uh, you know, the ball token probably wasn't, uh the best way to start in terms of the rug pole. But I think longer term, if you can look past that, um You know, and you look at the liquidity that coin base can bring to this and the user base, it already has. Um I think those risks will be minimized over time, but it's not to say that there aren't risks. And, you know, the biggest risk here is whether or not it is adopted. Um It's exciting news. Coinbase has come out with exciting news previously and it hasn't really panned out maybe the way it was anticipated. And I'm talking about the NFT marketplace and, and not to throw shade on Coinbase, but we still need to see whether or not users will participate. So I would look at the TV L on the chain. I think the, the Binance chain is, is kind of an example or um a parallel that we could analyze, but that's also a risk that it's um you know, it still needs to be used. All right, Ryan, thanks for joining the show and being with us this morning. Thank you. That was the head of tasty crypto Ryan Grace.