How Are Investors Attacking the Bear Market? | European Blockchain Convention 9

[Music] 3 2 1 go can you guys hear me that looks like it's okay all right uh good morning everybody thanks for for joining here uh it's actually kind of funny when we were talking about uh our plan for this panel last week uh the title was how investors are attacking this bare Market and I guess Bitcoin just never got the message because it decided to go on a tear on Monday and and Tuesday and it's continuing this morning so I I think uh my first question was going to be like what are the strategies that you're seeing when it comes to uh a bare Market but it probably makes sense to begin with uh exploring why Bitcoin is is is up so much uh but even before we get to that I mean maybe um aano and Stefan why don't you guys each just take a minute introduce yourselves to the audience and and talk about what you do okay maybe I can go first good morning everyone uh my name is aons I'm the head of innovation at uh banku BPI uh and one of my roles is exactly to accompany everything that's going on in in this crypto markets blockchain and try to understand how from the traditional side of Finance we we adapt to all of this and we uh we build on top of all of this right morning my name is Stephan Kimmel I'm the CEO of M2 M2 is a fully regulated crypto exchange and investment platform out of the UAE in Abu Dhabi so we offer everything around trading buying selling spot and Futures and as well as our y bearing products which are in the bare Market the most popular ones for instance we earn we we offer earn plans uh with yields of 10% on bitcoin 10% on E that that's kind of a key thing we doing super excited to be here as well as we are trying to get licensed globally as much as possible wherever regulation exists and Spain happens to be the next country uh where we filing for a license so very excited to be here today great so uh F let's start with you I mean what's going on from your perspective and and in particular I'm interested in some of the questions your clients are probably asking you uh about the the drivers of this rally and and in particular its sustainability so uh I think that we we come from a couple of difficult months right that's why we had the title of of bare Market which is which is also we were discussing before the the panel uh it's normal right new type of asset class A lot of different stuff going on here be it from the technology side be it from a more financial side and asset classes have ups and downs right and I would say that uh from a traditional Finance uh uh perspective uh we have a lot of clients asking about this space should I be in this space or or shouldn't uh and uh it's it's difficult to time markets okay I could I could have exactly this same conversation if we were talking about equities or or bonds right um and I so that I think that we need to take the conversation out of that part of is it going up or down and uh just deciding if you want to have exposure to to all of this okay short-term factors to why it went up so much since the beginning of the month uh really no idea in reality so I know Victoria kind of did a survey before we began as to kind of where everyone's from if it's not obvious I'm from the states um from Philadelphia specifically uh how many of you are from the states if if I could just see a quick raise of hands okay so just a small Handful in in the US in particular The Narrative surrounding this rally is uh it looks like the SEC is finally going to approve uh a spot Bitcoin ETF the the white whale for the entire industry uh we saw it about two weeks ago when a trade Pub published a turned out to be a false report about um the Black Rock offering being approved and now that we're starting to see real progress again in the US at least that's the main driver um Stefan I'm curious like do you agree with that or um is there some other current underlying this this bump that people are missing no I mean the should on is absolutely the key driver even the last two days I think the pump we've seen is mostly around news regarding the ETF um I I I think if you look at the bigger drivers though it seems like the the space is in an inflection point you see the first few years after Bitcoin starts it was all in in a macro environment of quantitative easing uh declining interest rates partially negative interest rates so there was a lot of access capacity that was pumped that didn't have anything else to go and was pumped into the crypto space which led to a lot of the evaluations we saw then a lot of the the the dump that happened the last two years was uh the opposite so interest rates were going up and money and and and liquidity was withdrawn from the market paired that with the all the the you know problems and issues that happen inside of cpto and then changes in regulation a few other things I think we're now at an inflection point where this is about to shift we have a lot of the inhouse problems being being washed out and taken care of or being removed and resolved uh we have a clearer picture on regulation everywhere except the US I I'd say and that's given a lot of confidence and Clarity and trust and and and security um to to investors as well as um you know vas and and and and those offering Services uh and finally even the quantitative tightening seems to come to an end I don't think we see quantitive eing very soon at least the tightening is coming to an end so this is a perfect scenario for fresh money to enter the space and specifically uh institutional money entering the space and that brings us back to the ETF that's in the US Micah is a big deal I mean I think many people that I speak with kind of look towards Brad russels with just a sense of awe and I think jealousy um given that in again in in the US right now um we've had a couple bills pass out of um um committees in Congress but obviously um since Congress right now doesn't even have a speaker um those pretty much have zero chance of becoming law anytime soon whereas Micah is going to go into effect at the end of next year which is going to be here sooner than we think uh I mean Stefan just staying with you quickly what impact you think the implementation of Micah will have on the investment environment in Europe and and in particular I'm I'm curious about coins and assets Beyond just Bitcoin but into some of the more altcoins and esoteric assets that uh perhaps investors especially professional investors may have more comfort in allocating towards with this regulatory Clarity so in in short the impact is huge um I think maika gives that Clarity it gives gives certainty in the space in Europe it allows institutions to enter at a whole different level let's bear in mind the the the space software has been predominantly driven by by retail and speculation of course the magnitude of Institutions entering is is many many times bigger than that so that that's and they need regulation otherwise they're not even allowed to invest in you know in crypto to to your question I still see the vast majority uh and all questions I'm getting um of Institutions all around Bitcoin and ethereum that's just I mean as as institutions you know Venture into the space they'll go for security they go for the least um let's say um questionable assets and Bitcoin is is is the The Godfather of of tokens is the mothership there's least dispute about whether it's a commodity or or or or an equity um it's just the most Clarity around it so those two I see by far the most interest F what do you think so um I think the European Union has been quite Innovative in M right trying to trying to lead the way here and uh I agree with what uh what Stefan was saying so you have a lot of players that have interest in this space but to do something here they need the regulatory Clarity okay uh maybe not the specifics but at least the big uh the big picture you need to have some comfort to make sure that uh you don't get into something and then you need to to adjust so uh I think that that you have a number of players that will end up entering this Market once uh once m is is live okay and when you talk about regulatory Clarity I mean there's two two areas in particular that I think investors really want to to be feel comfortable with one is understanding the tokens themselves and and making sure that for instance insiders don't have too much control there's um not hidden pockets of money that uh if there's lockups they're going to be adhered to so on and so forth and then from The Exchange perspective I mean we all saw what happened with the collapses of of FTX and blackfly and Voyager and celsus and I could go on and on and and that was really more of a risk management point of view um which one do you think is more important to your clients or maybe it's both even but uh I'm curious your thoughts there I would I would I would say both okay in in different uh almost equal in almost equal weights but uh I think that the key point is that with uh with MAA uh you get uh like in the in the financial world people are are used to regulation right and and you get sort of a uh updated blueprint to how Capital markets function in other types of instruments you are transposing that to to the crypto space to the blockchain space to the tokenized asset space and that gives a lot of confidence even if you say but uh maybe we we could comply with all of this without having to have regulation but for a lot of people that part is is still uh still very important okay Stefan I want to I want to talk to you a little bit more about ether um you mentioned it before and I'm getting a lot of questions from my own readers about sort of the outlook for ethereum because there there's a lot happening I mean we're a year after the merge um I guess we're six months or so after um um after withdrawals were were were enabled and I mean right now the validator queue is pretty much close to to empty um transactions transaction volume fees I mean they all really kind of haven't moved U too much this year and we're seeing l2s arbitrum uh optimism um polygon madx zky others growing what is do you think right now sort of the investment thesis for for ether and and in particular I'm interested in some of the metrics that you're looking at to kind of get a sense of if an investor is trying to allocate between ether and some of these l2s like what's the right Mech yeah so I I I think the over long-term Outlook is is is unchanged I mean of course as you said it's it's uh underperformed against Bitcoin massively especially the last few weeks because of all the attention Bitcoin has been getting whereas eth definitely is still in the bare Market the only chain activity the active wallets number of transactions so the the metrics you mentioned are the same metrics I would look at um on on the on the l2s between one and L1 and l2s I mean that that's I I think a matter of of also risk appetite and and upside potential You' like to get exposed to I think by by by all standards and means uh ethereum obviously is the largest ecosystem with the most applications and the most activity on it um and I would expect as well as we see markets picking up for ethereum to be the next one after after Bitcoin to to take up um more more price movement so in in my view that's that's still the safeer bit and probably also again where most of the institutions will go before they go into the the l2s what are some of the use cases um that the daps that you think would drive this next era of growth in ether and some of the other l1s out there look I mean in the short term it's it's um it's obviously the the ones we're seeing around trading uh around payments money transfer uh and everything around uh well trading and investment what we seeing now is is around identity which I think is super interesting um and then around gambling I think is is the obvious next one that is happening on ethereum as well like ugle apps for instance yeah what do you think there wait in so um and picking up on you you just talked about uh regulation in Europe there is another piece of legislation which is also interesting which is the the pilot regime for distributed Ledger Technologies and and I think this ends up connect connecting with with eer okay so if you talk about uh public blockchains um where you can build on top of this ecosystem is the still the most the most relevant one be it eer or or or l2s so when when you talk about an economy that can move when you talk about a tokenized economy okay if you talk about tokenization of assets equities bonds uh whatever um or payments you see multiple applications being built on on top of this infrastructure okay so um I think it's easy to be to be positive on on that space because again uh regulatory Clarity uh calmer uh calm after the storm so we have passed a lot of hurdles in this in this space you see people picking up the interest wanting to build on top of this not only native blockchain uh initiatives but other space is entering and this ecosystem has a lot to offer okay great uh fanso um are you getting questions about the having that's going to be coming up in about 6 months or so from your clients and uh if if so or if not I'm curious your thoughts on kind of how that's going to impact the investment landscape for uh for Bitcoin uh so uh imagine if uh picking going back to to what you were saying just a few minutes ago uh if you start having a an ETF that is publicly available uh spot Bitcoin um it's it will it it will change a lot of the investment fees that you have in be it private wealth management um uh portfolio management be it for more retail investors it will definitely be a a game changer so I think that uh if it if it passes if it comes it sees the light of day it will it will have a lot of impact okay okay right Stefan I want to ask you about um sort of the yield generation strategies I know you mentioned you offer some and and and in particular again going back to uh last year with some of the bankruptcies and continuing this year uh and how do you manage that in a responsible way and and in particular um in this heighten interest rate environment I mean here in the states and then also in Europe I mean there are safer ways to generate um decad high yield just just buying treasuries and other types of government secur Securities I mean what is the demand what does the demand look like for for those types of of products and um and how are you able to generate offer yields like 10% and and so on that that higher than you would get typically in a um from some of the more traditional Investments yeah that's obious the question we get the most how do you generate the yields I mean to to answer the first half of your question I I I think with more interest or higher interests available in the in traditional Finance just in term deposits or or treasuries um those who don't want to put everything in crypto which most most people don't you could still you know look at this from an overall portfolio allocation it's more interesting to have some of it perhaps in in traditional vehicles and then another allocation that that is more more more more risk oriented and and seeking higher returns in crypto um to the question of how we do it so in essence we have have an in-house asset management team that that mainly does three different things of of the um money it's allocated into those earn plans uh we um invest some of it in Bitcoin mining we partially owned by the largest Bitcoin Min in the world so that gives us access to um enough capacity and and and rates to to generate those yields the second one is our in-house trading team we do algorithmic trading in options and Futures as well as Market making um and the third one uh is on platform lending fully collateralized so what's important for us in terms of the learning in previous years we we keep everything in house we don't give it to third parties you don't put it on defi uh because of all the risks that are there so we're trying to minimize the risk as much as possible okay great uh I I have like two more questions and I want to leave a few minutes for for Q&A as well um I want to ask about nfts I mean fanso is that something that you're getting any questions about any any interest in and I think nfts even more than more traditional as much as I can use the term when it comes to crypto assets have been hurt um more in this market so uh do you have any thoughts on nfts yes so even more difficult space right uh so I I would say that with with nfts we were able to to democratize the idea of digital property okay so the idea that there is real value in digital property okay and that part from a traditional uh institution it interests us a lot okay uh a lot of hype okay so we went now now through a difficult cycle but I I I really feel that there is a very big space for for digital property be it in the form of nfts uh or others in the in the future and that's that's a space that we are actually uh looking into trying to understand as a bank how can we develop the infrastructure to be prepared for for this so it seems like it's a lot more than cartoon monkeys and pixelated I I would say that it's it's a lot bigger than that and uh we are actively uh working on understanding how a traditional institution can actually be positioned uh in the digital property space okay let's skip away from the monkeys for now and we are actually we are here with with with um with the partners that we are working with with this they are actually they are called self focus they have a a stand here uh it's interesting to to to pass there to to see what's this what's the perspective that self focus is bringing to this blockchain yeah it's funny I have I have three daughters they're 7 five and two my seven-year-old um she's been asking the tooth fairy for Bitcoin and Tooth Fairy has obliged and then she asked the tooth fairy for abort ape and she was very disappointed um uh last week just real quick before I I I get a couple questions um Stefan what are one or two projects or tokens that that you find particularly interesting that are kind of flying under the radar um that's a good question uh I I think all the ones that are interesting are not under the radar at at least none I can think of that are super secret and and not flying okay uh aonso what about what about you is there anything that no no investment recommendation specifically but but I would say that uh uh as always uh I I don't think it's uh it's a good way to to make investment decisions based on being on a bull market or a bare Market okay you need to have stronger convictions in that so everyone's keeping their cards close to the chest which is uh completely completely fine um maybe they'll loosen up a little bit later uh drinks or something uh we have about three and a half minutes this anybody have any questions okay all right we'll keep talking but if anyone does have a question then happy to to um to bring it on going back to the ETFs uh again at least in the US I mean I'm just seeing all these crazy numbers $30 trillion $15 billion that are going to be thrown into a Bitcoin ETF when it happens um those types of products have already been existing in Europe for for for years and uptake has has I think been relatively soft especially for assets Beyond just Bitcoin and ether um you I'm sure you guys have been following um ETFs and etps and and so on and so forth uh aonso what do you what do you think what lessons can be learned from ETF and ETP adoption in Europe that uh I I I think it it has to it has to do with global acceptance okay if you have something that okay we have it in Europe you can do it in European portfolios it's completely different than having something that you can do at a at a global scale okay and and when you talk about the passive management industry ETF industry uh a lot of strength and a lot of assets and management are in the US okay so having it available in the US gives it a completely different push on all of this stepan what do you think yeah 100% agreement let's bear in mind 60% of global Capital markets are in the US um so whatever happens in the US drives the rest of the world so hard that that it just shifts the needle a lot more uh Rel related to that even the availability in in Europe European markets doesn't necessarily mean that European institutions immediately invest I think we now also have a better overall macro environment and and Regulatory environment um paired with the availability of of potential us capabilities um or us Capital uh to to Really Drive the needle okay uh in the minute and a half we have left um I'm going to try to finish by just asking each of you uh not necessarily to predict when this bare Market is is going to end um but I'm interested in what markers what signals you're looking for to kind of get a sense that the the the tide has has turned and that um either it's this upswing or a future one might be more sustainable I'm imagine I'm I'm I'm looking more into uh number of people that are active in the space okay so a number of uh active wallets number of Institutions that are actively Distributing ETFs with this sort of assets so I'm more looking at acceptance than uh market value as a whole I think that if acceptance is there then the market the market cap naturally will have to to go up great I think we have one question why don't we hello good morning and nice to be here thanks for all the insights that you've provided so far and I just had a question for alonsoa in regards to the um how long or how can uh could you give us an estimate on when would your bank provide Bitcoin Services uh uh crypto Services Buy sell income withdrawals are you waiting for M to be already in place are you already expecting uh to launch it before and if else uh how do you see yourself as your bank position uh in regards to other competitors European in particular okay thank you very much for the question so it's it's an easy one it's an easy very easy one now I I would say that at this stage um we are not really worried with client product deployment we are worried about being technologically ready okay so we are in a learning stage where we want to learn as much as possible about the blockchain ecosystem about the different solutions that we will need to be able to speak in the future um product development for customers a little bit down the road obviously MAA and all the regulatory surroundings will will help us uh will help us with that but a little bit more down the road for now more of a an internal positioning thing and learning uh Expedition if you want thank you very much for the question thank you for the question I our our time is up but Stefan I'll give you like 15 seconds if you have any thoughts on when you like what you're looking forward to um signal the end of the bare Market before we wrap up in my mind the the full bar Market is is is over we we've we've reached B if you look at Bitcoin year and year it's it's actually up if you ask me shortterm i' say I'm horrible at short-term predictions I usually lose money when I try um so I I I try to get exposure and look at a la I'm more hot low than anything else so look at long long-term views and that's that I'm super bullish about okay great well thanks everybody for your attention question uh enjoy the rest of the event and thank you to the panelists as well 2 1