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On today’s episode of “Markets Daily,” host Jennifer Sanasie speaks with Mark Connors, head of research at 3IQ, about 2024 bitcoin price predictions, why ether is a “sleeping dog,” and where institutional interest in crypto assets is picking up.
This episode was hosted by Jennifer Sanasie. “Markets Daily” is executive produced by Jared Schwartz and produced and edited by Eleanor Pahl, alongside Senior Booking Producer Melissa Montañez. All original music by Doc Blust and Colin Mealey.
Audio Transcript: This transcript has not been edited and may contain errors.
JENNIFER SANASIE:
It’s Wednesday, January 17th, 2024 and this is “Markets Daily” from CoinDesk. I’m your host Jenn Sanasie and let’s dive into those prices. According to CoinDesk Indices, at 8 a.m. Eastern time, bitcoin fell 1% over the past 24 hours at $42,726. Ether was roughly flat over the same time period, at $2,549. Altcoins took the spotlight yesterday as the megacap coins traded relatively flat. Today’s ‘Mover’ in the CoinDesk Market Index is ChainLink, ticker LINK, up 5% on the day. In traditional markets, the NASDAQ fell 0.19% yesterday and the S&P 500 was down 0.37%. Stock market sentiment is remaining weak after increased uncertainty about the possibility of U.S. interest rate cuts. And in commodities, the Brent crude benchmark fell slightly yesterday, trading at 77 dollars and 11 cents a barrel. Meanwhile, gold was trading at 2027 dollars an ounce. For more on the markets action, let’s bring in 3iQ Head of Research, Mark Connors. All right. Let’s just start very broad here. What are you watching this morning?
MARK CONNORS:
Interest rates. So we have two separate systems. You just mentioned ChainLink rallying in alts. Because you know, the benchmarks are kind of sleepy right now, you know, bitcoin and in ether are slumping a bit. So the money has to go somewhere. And what’s odd is that in the digital asset ecosystem, you’re seeing rallies in Solana, you know, and ChainLink, like you said, but in the traditional assets, banks, all the higher beta names are down and they’re down again today. So again, we see a decoupling in digital assets on a, should be a full risk off day, and it’s not versus traditional assets. So I just want to bubble that up. And I think it’s one reason why hedge funds are adding to their digital assets, because they’re going after that lack of correlation to the rest of the portfolio.
JENNIFER SANASIE:
Let’s talk a little bit more about interest rate cuts in 2024. What are you expecting to see and how might that impact risk assets like bitcoin?
MARK CONNORS:
You know, we may, I think the Fed is going to be brought, just like Gensler was, brought dragging and kicking and screaming to approve the bitcoin ETF through gritted teeth, as one person said. I think that the Fed will be forced to cut, just like the ease last March, because you had bank failures. And I think you’ve seen some pressure in real estate. So are there 1, 2, 3 cuts? That’s my bid, ask anything beyond that, I think is going to require an armageddon coming of failures to be more than that.
JENNIFER SANASIE:
On that note, let’s talk about bitcoin. Now, what will bitcoin’s narrative be?
MARK CONNORS:
Let’s just get very narrow. It was a nothing burger from a trading standpoint. You had expectations of BlackRock, you know, the biggest gorilla in the room. And what happened was, they showed up with some buying, just enough to take on the selling of Grayscale. Because Grayscale, what you had was a captive, you had $26 billion in captive assets, screaming to get out. So we’re seeing some of that, you know, but they are finally able to get out at NAV. Luckily, Ark, Bitwise, Fidelity and BlackRock brought enough to the table to absorb that, you know, couple of billion in selling that we’re seeing. When that gets cleaned up, only then will we be able to see price rise. So that’s bitcoin right now on the trading side. But stepping back, the fact that Gensler had to capitulate to the Federal Court’s decision in August, that unlocks 40% of the world’s buying power, 40% of equity and bond ownership is in the U.S. Now they can buy it, but that’s not going to happen overnight. So that’s intact. It’s one reason why we kept or went out with ahead of the ETF approval, our price targets of $110k to $160k for bitcoin, we think that that’s going to take a few months to kind of get so we need to get through this at a higher level though. Holy moly, the all the positive catalysts are there for us. And as we said, with interest rates, up or down, doesn’t matter. Bitcoin’s gonna pop through it, just like it did last March. So that’s bitcoin. Ethereum is the sleeping dog that is being overlooked. And like the alts as well. So that’s a different story we can talk about if you’d like.
JENNIFER SANASIE:
Mark, let’s talk about that bitcoin price prediction before we hop over to Ether. That’s a big prediction for just a couple months, when we took a look at the price a few moments ago, bitcoin was just over $42,000. What’s it going to take to get to that $100,000 mark and beyond?
MARK CONNORS:
Not a lot, and it sounds like a big number. I’m a former risk manager. I look for downside, like, we didn’t come at this lightly. $110 is easy, we think, based on the price action of the previous happenings. We think we have a, you know, three to six times type movement from the happening through the end of the year. So we kind of brought that back a little bit because basically, how do we get there to have any it’s going to help institutional adoption helps. We’ve had very little institutional adoption. And as we talk to clients, our founder, Fred Pye, our sales team, went out to institutions in Toronto, Vancouver, Montreal and in New York, and they’re still registered. They are not engaged in it. They haven’t been incentivized to, there’s no solicitation at the banks in the U.S. or Canada. So it’s still not a mainstream asset. The SEC approval unlocks that that’s why we think $110 to $160 with a happening is pretty fair game.
JENNIFER SANASIE:
Mark, do you think the SEC approval really does unlock that though? You mentioned Vancouver and Toronto, a spot bitcoin ETF has been available there for quite some time before last week. Does the SEC approval, I guess, pave the way in markets where they don’t really have any regulatory oversight?
MARK CONNORS:
So, yes, unfortunately, they do. The SEC does look to it. And let’s look back at what bitcoin is. It’s a global asset. If it’s bought in the U.S., the price goes up in Toronto. And so I think unlocking the buying power in the U.S. and the sentiment of the institutions. Remember the institutions that went into digital assets were private equity, because they understood that wrapper, unfortunately, they bought the wrong animals, right? They went into the FTXs, et cetera. Now you can go into a transparent 15 year old visible commodity called bitcoin, that audience is going in, and that’s why the price is going in. It’s a new buyer, and you’re now allowed to buy in the U.S., and that price is going up globally.
JENNIFER SANASIE:
Mark, let’s move to ether. Now, I don’t know if you use these exact words, but you called it somewhat a sleeping dog, maybe being overlooked. The price of ether actually rallied on the approval of the spot bitcoin ETF news, some are hoping for a spot ether ETF this year, what’s your outlook there?
MARK CONNORS:
We’re very constructive on ether. Besides the upgrades with Capella, where we were able to now unlock the staking rewards, which is a component of income and value, that traditional asset managers understanding and use discounting now. I don’t know the full analogy, but it’s like, given a third baseman a glove, or, you know, the golfer, the club. It’s the instrument they’re familiar with, and they can play the game. So that’s why that was so important. Because now you have cash flows that come to you, and you can take them in and out if you’d like, first thing, the reason why it’s sleeping, is because we think that the ETF is not going to come anytime soon. Yes, you’re right, the price went up 13%, bitcoin went down. So for the first time, ether outperformed bitcoin for a week, I think, in the last year and a half or so. So you’re right, that ether-bitcoin dominance ratio just had the sharpest increase ever. Reading Gary Gensler, his comments when he had to he had to approve the ETF. The bitcoin ETF, he said its cabinet is cabinet to this commodity. We only did it because a court forced us to do it, which was our number one thesis, we knew why we knew we had to do it because he was called unlawful. I think it’s gonna take a court approval for that to happen to us. Luckily, there are ETFs out there for investors, but it doesn’t include a spot in the U.S. and it won’t for a little while, I believe. And so one more thing, Jenn, the reason why we’re all hopped up on unease: so basically, bitcoin got attention, and we think the price went up and the and the hash rates higher is because of the cash flows. People don’t like inscriptions, but we’re constructive on this novel technology that we think will evolve to more purposeful applications, but it is cash flow. And cash flow is good for a system. Bitcoin’s got it. And ethereum has it in spades. So that’s why I think Ethereum will follow the flywheel of price appreciation that bitcoin enjoyed over the last 12 months.
JENNIFER SANASIE:
With that in mind, where do you see the price of ether going as we head deeper into 2024?
MARK CONNORS:
So we haven’t come out with a full price target, but we will say that we appreciate that there’s a gearing to ether. So we have $110 to $160 which is anywhere, a two and a half to almost four times price move for bitcoin. Ether is higher beta, has higher gearing because of the applications. So you can kind of take that to what we think ether’s price is going to be when we come out with that report.
JENNIFER SANASIE:
You mentioned ETH staking and I think some congratulations are in order. I was reading that 3IQ staking ETF and ether fund have now generated over a million dollars through staking activities. Talk to me a little bit more about institutional interest in staking.
MARK CONNORS:
The institutional interest. We’ll talk about staking. First of all, thank you. That was our team who did that, spent a lot of time working with Coinbase and others to decide what’s the best animal to do it. The interest is still there. But you can tell by volumes. We’re getting more each month and each week. So there is some inflows, but it’s more than meetings. So we are literally in this is not just a sales talk. We have not seen as many incomings by the banks and by the institutions than we have since last Wednesday’s approval, not just for BTC, but for ETH. So that’s why it’s sleeping. They aren’t acting yet. But now they’re starting to move. First comes the give me the documents, then give me the meetings which we’re having now. And the next is, you know, the order goes to the trading room for the purchase. So we’re two out of three on the steps for institutional adoption.
JENNIFER SANASIE:
Mark, thanks so much for joining the show.
MARK CONNORS:
You bet Jen. Thanks for having me.
JENNIFER SANASIE:
That was 3IQ Head of Research Mark Connors. Thanks for listening. That’s it for today’s show.
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