Bart Smith, the Head of Digital Asset at global quantitative trading firm Susquehanna International Group (SIG), and a man CNBC refers to as “Wall Street’s Crypto King”, explained on Tuesday (November 20th) why he remained a long-term believer in Bitcoin (BTC).
Yesterday saw the Bitcoin price fall to as a low as $4,175 at one point (20:20 UTC), as can be seen by this one-day chart from CryptoCompare:
And Smith was a guest on CNBC’s “Fast Money” Show. The host, Melissa Lee, started the interview by asking Smith if this was “capitulation” and we were “close to a bottom”.
Smith started by explaining what he believed was behind the latest sell-off:
“So, there’s a couple of factors that have led to this. Number one, the on-ramp for new capital is very difficult… So, if you are a high net worth person from the western world, or you are a global institution, it’s still very difficult for you to buy Bitcoin the way you might want to… So, if a wealthy individual from the GI generation is not going to take the high resolution picture of their driver’s license and send it to a website and send them the money there. They want to invest at Fidelity. They want to invest at Bank of America. So, that has led to the second problem, which is without the new capital on-ramp, liquidity has been very low.”
“And so, we’ve seen a stable price all through the summer… volatility got really really light at the end of October…. The 10-day realized volatility was like 9… And so what happens in that environment, when you have a contentious fork, like you had with Bitcoin Cash, and you could say those two constituencies’ conduct to one another might be defined as juvenile, and it doesn’t necessarily create a tremendous amount of confidence, and when those sellers come in, there’s just no liquidity to absorb it. So, without these new on-ramps that hopefully [we’ll have] with Bakkt, Fidelity, and further regulations in 2019, there’s not going to be capital to soak it up.”
Smith was then asked if he agreed that there was no good use case for Bitcoin. Smith said that it was important to take a long-term view:
“Satoshi Nakamoto designed this algorithm so that the last Bitcoin would be mined in 2140 for a reason. This is supposed to be a long game. So, there’s a lot of talk today about the Thanksgiving table a year ago when it was at $8,000. But the Thanksgiving before that, it was at $750. And the Thanksgiving before that, it was at $350. And in 2010, someone bought two pizzas for 10,000 bitcoin that today would be worth $40 million. So, I understand the price action if you bought at the day futures were launched in December to now has been pretty painful, but listen, every great idea is volatile.”
“Amazon, which we talk about over and over on this show, it went down 95%. It went from $106 to $6, and people wrote it off as being dead. So, I think that, yes, the price action has been difficult, but I think the idea of having a perr-to-peer sovereign non-centralized store-of-value, or peer-to-peer cash is something that has been desired for a long time, and the price action from now till the end of the year when Tom Lee may or may not be wrong, or into next year, is not going to define if Bitcoin is successful. The usership of it has to expand.”
Featured Image Courtesy of SIG
