Aug 11, 2023

The Producer Price Index (PPI) rose 0.3% from June to July, the highest monthly increase since January.

Video transcript

The producer price index rose 0.3% in July which was hotter than expected. Joining us now to discuss how the crypto markets are reacting is innovating capital, general partner, Anthony Georgia. Welcome to the show. Anthony, thanks for having me. Great to be here. Awesome to have you here. I just said we're going to take a look at how the crypto markets are reacting, but we took a look at a few charts at the beginning of the show and it looks like they are relatively unmoved. Are you surprised to see that this morning? Uh It is a little bit interesting, you know, when you look at futures right now in the equities market, you know, NASDAQ looks like it's down almost, you know, 70 basis points S and P is down about 25 30 basis points. And, you know, I think the data between yesterday and today um starts to really kind of signal fears that, you know, there might not necessarily be so much of a soft economic landing here and that, you know, potentially the guidance and certainty in terms of where terminal rates will shake out on a monetary policy perspective is a little uneasy now. Um Just given the fact that it does seem that costs more than anything are going to stay where they are for quite some time on the digital asset side. It's fascinating to see that the markets are relatively unchanged and, and haven't necessarily responded to this as negatively. I think that has to do more with the fact that the digital asset market has largely priced in a lot of the monetary policy, fears and uncertainty in terminal rates and we probably would have saw much more of a movement upwards. Um Given where data came in. Do you think we're going to see? Um another rate hike? I do think that the guidance from terminal rates in the range of, you know, 500 to 600 basis points will stay where it is. And I think the bigger fear of what we saw today is there's still more work to do. Um these are not data points that suggests by any means that we are at the point in time where both the current environment um in terms of interest rates as well as the duration in which rates have been hiked has been enough to bring costs down. Um Economics are starting to caution that housing costs are unlikely to help drop dramatically moving forward. You see certain depressed prices in areas. Um but those aren't necessarily expected to keep dropping if you look at things like medical care or airline fares or things like that. So, while future pricing, you know, may suggest that we won't necessarily see a raise in interest rates. It isn't necessarily suggesting the converse might be true in which we would see maybe a cut in rates either. And I think that's what the market is actually more so ascertaining right now. All right, let's transition back to the crypto markets and talk about matrix ports, Bitcoin, greed and Fear Index. It's suggesting that there could be a bull revival in Bitcoin. Uh What's your short term outlook on Bitcoin? What might we see it do? Uh leading up? Well, in the second half of the year, there's really three large catalysts that we're mindful to as it pertains to the Bitcoin price, as well as the broader digital asset pricing in the market, first and foremost monetary policy, which we just touched on. Um Second to that really has to do with some of the broader global currency risk and fears hyper inflation continuing to spiral out of control some of the de dollarization that we saw over the last several months and earlier this year with the banking debacle that's really played a significant role and revitalizing this sort of thesis around Bitcoin and certain digital assets behaving more like a safe haven commodity and overall idiosyncratic asset to acquire that doesn't necessarily have those same features as monetary policy based currencies around the world. The third is really on a regulator side obviously a bill that's going through Congress right now, that really sets the stage to eliminate what we've seen as enforcement centric regulation by certain legislators in the US. And moving more towards having clear cut guidelines that will pave the way for both institutional adoption, retail adoption, day to day consumption and activity of digital assets, as well as really propelling some of the innovation into the markets. We're starting to see big players, you know, Schwab Black Rock, you name it that are starting to really jump into the space with some of that clear guideline that's been established. Yes. Speaking of catalysts and hype matrix report also predicts that the SEC is going to approve several spot. Bitcoin ETF s, what's your take on on the hype around these? Do you think we're going to see several approvals before the end of the year? You know, it's, it's always tough to really rationalize how much of certain of this activity is, is adequately priced into the market and what the incremental impact would be, you know, in terms of pricing in the news versus the actual reality of things. I think generally speaking, setting up for spot based assets and derivatives versus ones in the past that were purely cash settled is extremely important just in terms of the overall demand and really sets the stage for global adoption of Bitcoin at scale to the extent that we're already seeing in certain emerging economies and established economies across the world, whether it's Argentina or Turkey. And really quickly, I want to get your thoughts here on alt coins. Uh We had a report on coin desk that says a bullish inverse head and shoulders pattern is forming. What do you, what do you think about alt coins? Do you think we're gonna see them break out? I don't necessarily always, you know, suggest that um users trade off of pure technical patterns particularly in a market that has only been around for a decade. And how many, you know, technical patterns are we able to really leverage and, and that sort of analysis and speculation, I would say from the al coin perspective, overall, there are a ton of fundamentals. Um And I think that what we've seen is, you know, the baby has really gotten thrown out with the bath water over the last couple of years and it's led to a lot of suppression and pricing. Um And I do think that there are certain coins out there that will really be fundamental players in the broader web, three ecosystem over the next few years that do have some intrinsic value behind them. Um So, you know, I wouldn't necessarily be surprised if the market, especially as those catalysts that we talked about, start to really play out, starts to really reprice certain of these assets. And, you know, of course, you'll see overall systematic movement in the market. Um But I do think certain key players will really be large beneficiaries of that. All right, Anthony, we're gonna have to leave it there. Thanks for joining the show and I hope you have a great weekend. You as well. Thank you. That was innovating capital, general partner, Anthony Georgia.

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