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On "Markets Daily," Tom Schmidt, General Partner at Dragonfly, discusses market pricing, indicating a 0% probability of a rate cut in June. He and Sanasie delve into the disappointing performance of Hong Kong ETFs compared to US ETFs, highlighting the former's role as an accessible vehicle for Bitcoin investment endorsed by regulators. Despite Hong Kong's crypto-friendly environment, ETF inflows are slowing in both Hong Kong and the US, with investors shifting towards lower-cost options to reduce fees and improve returns. The conversation anticipates a potentially more hawkish tone from the upcoming Fed meeting but remains optimistic about controlling inflation. They also touch on conflicting views regarding inflation and rate cuts, noting external pressures favoring lower rates to stimulate the economy.
Takeaways |
- Crypto markets are experiencing a bearish sentiment ahead of the FOMC meeting
- The market has priced in a 0% probability of a rate cut in June
- Hong Kong ETFs have been underwhelming, with low trading volume
- There are differences in the functioning of Hong Kong and US ETFs The ETF provides an easier and cheaper way for investors in Hong Kong to access Bitcoin.
- Hong Kong has been more welcoming to crypto than the US, with teams working on creating a stablecoin ecosystem.
- Inflows into the ETF are slowing in both Hong Kong and the US.
- The ETF served as an endorsement of Bitcoin as an asset class by regulators. Investors are rotating out of higher-fee ETFs into lower-cost ETFs to reduce costs and improve returns.
- Crypto is seen as a long-term story that continues to gain traction as an asset class.
- The Fed meeting is expected to have more hawkish statements, but there is optimism that inflation will come under control.
- There are conflicting ideas on inflation and rate cuts, but external pressures are pushing for lower rates to stimulate the economy. Higher interest rates may be necessary to control inflation, but they can also impact individuals' net worth.
- Interest rate decisions have political implications and can create breathing room for the current administration.
- Macroeconomics is still developing its understanding of central bank functions.
- There are differing opinions on the future price range of Bitcoin. Regulatory challenges in the cryptocurrency industry can have a significant impact on investments.
- Operating outside the US can provide advantages in terms of regulatory compliance.
- Stablecoin legislation is needed to provide clarity and stability in the market.
- There are ongoing regulatory battles between companies and regulatory bodies. The SEC's attempt to classify Ethereum as a security is unlikely to succeed
- There could be a potential turf war between the SEC and the CFTC
- Ethereum's decentralized nature and global validator network make it difficult to argue that it is a security
- The actions of the Ethereum Foundation should not be attributed to Ethereum as a whole The crypto market is currently facing challenges in terms of regulations and enforcement.
- Founders in the space are looking for clarity and a clear path forward.
- Points are an important tool for teams to bootstrap their networks.
- Liquidity mining and the use of points are likely to continue in the future.
LINKS |
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This episode was hosted by Jenn Sanasie. “Markets Daily” is produced and edited by senior producer Michele Musso, and executive producer Jared Schwartz alongside Senior Booker, Melissa Montañez—all original music by Doc Blust and Colin Mealey.
