DCG CEO Barry Silbert Explains Why He’s Excited About This Year’s Crypto Bull Run

Siamak Masnavi

In a recent interview on Fortune's online show "Balancing the Ledger", Barry Silbert, the founder and CEO of incubator and crypto-focused venture capital firm Digital Currency Group (DCG), explained why he is excited about the 2019 crypto bull run that has taken the price of Bitcoin to around $8,000 and the things that make it more special/meaningful than the last major bull run which resulted in Bitcoin's price reaching an all-time high of almost $20,000 in December 2017.

Silbert's comments came while he was being interviewed by the show's two hosts, Jen Wieczner and Robert Hackett. This interview covered several interesting topics.

Digital Currnt Group: The Crypto Conglomerate

Silbert explained that DCG does three things:

  • invests in early stage companies (currently, it has investments in 145 starts in the blockchain and crypto space);
  • invests in digital (or crypto) assets ("we just go long and try to accelerate the awareness and the utility of the ones we are excited about"); and
  • owns three companies—Grayscale Investments, one of the largest crypto-focused asset managers, with around $2 billion in AUM; Genesis, which is involved with OTC trading of crypto, as well as institutional crypto lending; and events/media company Coindesk.

In the past, as Hackett reminded us, Silbert had said that he was trying to turn DCG into the "Berkshire Hathaway of Crypto." Silbert confirmed that this was still his aim, and that at some point in the future, he wanted to take DCG public (i.e. do an IPO).

What's Currently Driving the Bitcoin Price

Silbert explained that although during the past 5-7 years we have seen, four times, the price of Bitcoin crash and then rise again to record highs, the difference between this year's price rally and the bubble that we had in 2017 is "night and day" in several ways: 

  • the custody providers;
  • the trading infrastructure;
  • the compliance offerings;
  •  the awareness; and
  • the on/off ramps (Bakkt, Fidelity, Square, Robinhood, etc.).

"It's just a matter of how quickly the retail and the institutional money will come into the space. What we see behind the scenes are people starting to open up their checkbooks."

He went on to say that one of their subsidiaries, Grayscale Investments, recently published its Q1 2019 report, which revealed that the majority of the money that arrived in Q1 was from institutional investors, with 99% of the total inflows going into Bitcoin.

Silbert also mentioned that it was notable that "the price stated its accelerated move up right when the trade discussions [with China] broke down," which could be another data point suggesting that Bitcoin performs as a "non-correlated asset."

Bitcoin Price Surges Above $9,300 for First Time Since June 25

On Monday (July 6), the Bitcoin price managed to surge past the $9,300 level for the first since June 25, a move that was likely powered by the current bullish in the stock markets of China and the United States.

Today's strong rally in the world's major stock markets started was led by China, where the Chinese government is apparently encouraging investors to buy stocks.

According to a report by CNBC, "a front page editorial in state-owned China Securities Journal" (publishe-d earlier today) talked about the “wealth effect of the capital markets” and suggested that a “healthy bull market" was important for the economy at this time.

Peter Boockvar, chief investment strategist at Bleakley Advisory Group, says:

"We have the Fed to juice bull markets, China has its state media."

The CSI 300, which is "a capitalization-weighted stock market index designed to replicate the performance of the top 300 stocks traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange", closed over 250 points higher at 4,670.09, up 5.67%. 

CSI 300 Chart by Google Finance on 6 July 2020.png

As you can see in the above chart from Google Finance, in the past five trading session, the CSI 300 index has gained over 13%, the most in a five-day period since December 2014, and helping the CSI 300 to reach a level last seen in June 2015.

CNBC says that although "China’s economy faces many hurdles, including trade issues with the U.S. and the growing friction as the economies move to decouple",  in the near term, "the prospect of an improving China spilled over to other markets, boosting sentiment for global trade."

Europe's major stock markets followed China's and all closed higher.

As for the U.S. stock market, premarket trading data indicated that the market would be having a good day, and it has not been wrong so far.

Currently (as of 18:37 UTC on July 6), the Dow Jones Industrial Average (DJIA), the S&P 500, and the Nasdaq are at 26196.15 (up 368.79 or 1.43%), 3172.03 (up 42.02 or 1.34%), and 10404.81 (up 197.18 or .93%) respectively. The leading sector was (as usual) technology, with Amazon and Netflix setting new all-time highs, helping the tech-heavy Nasdaq to power itself to a new all-time high.

This is what President Trump tweeted around 10 minutes after the U.S. stock market opened:

Today's stock market rally in the U.S. means that the S&P 500 and the Nasdaq are both on a five-day winning streak. 

So, what's fuelling investors' perhaps surprising amount of bullishness on stocks in the midst of the COVID-19 pandemic? This might be especially mystifying in the case of the U.S., where we are seeing around 50,000 new daily cases of COVID-19 (even though, thankfully, the number of death are going down).

It seems that investors and traders believe that:

  • As lockdown measures are eased, the outlook for businesses should keep improving.
  • There are encouraging signs from the pharmaceutical industry that we will soon have good therapeutics in the next few months and reliable vaccines by next year.
  • Governments around the world will continue to support the financial markets with monetary and fiscal stimulus.

Andrew Brenner of National Alliance told CNBC:

"I’m starting to believe the Covid case are an inverse indicator. The worse it gets, the more the market does better because it means more Fed and fiscal stimulus will come towards the markets."

The optimism that is fuelling the stock market rally appears to be also helping Bitcoin since today Bitcoin shake off the lethary of the long Independence Day weekend -- which saw Bitcoin dropping below $9,000 at 21:15 UTC on Sunday (July 5) and bounce back above $9,300 for the first time in 11 days:

2 Week BTC-USD chart on 6 July 2020.png

Featured Image by "WorldSpectrum" via Pixabay.comSave