TheoTrade co-founder Don Kaufman shared his views on the crypto markets with CoinDesk TV. He explained that the decoupling of bitcoin from other major asset classes could've contributed to moving price action. "What I think we saw over the last couple of days ... this is like a quintessential bear market rally," Don said. Watch the video or read Don’s comments below.
Christine Lee:
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Christine Lee:
Live look at Bitcoin. The CoinDesk Bitcoin Price XBX Index currently at $44,119. Bitcoin is up about 1.3% over the past 24 hours. The CoinDesk Ether Price ETX Index at 31.77. ETH is also rising 2.6%. The DFX CoinDesk's DeFi Index at 3.36, also making an advance of almost 4% for the day.
Lawrence Lewitinn:
So joining us now, of course, it's not the only thing we're talking about is what happened with the Bitfinex hack, there's a lot happening in the market, so joining us now to discuss the crypto markets is Don Kaufman. He's the co-founder of trading educator TheoTrade. Good morning, Don. Welcome.
Don Kaufman:
Yeah, thanks for having me back on.
Lawrence Lewitinn:
Yeah. So the markets have been fairly flat over the past couple of days, but they're up since Friday. So what do you think is happening right now? Have we finally turned a corner in that sell off that's been brutally punishing a lot of the holders over the past few weeks?
Don Kaufman:
Yeah. I mean, ultimately you're looking at, what, almost a 50% decline since some of the recent highs, specifically in Bitcoin, again, almost a 50% decline. One of the most interesting things, though, that we've seen over the last couple of days is there was a great degree of correlation between Bitcoin specifically and most of the crypto products and other major asset classes. And that really, it decoupled specifically on February 4th. I mean, again, Bitcoin, it just absolutely exploded. It ripped to the upside, which in very large part we believe is actually due to an interest rate shock that was kind of felt around the entire globe.
Christine Lee:
I know Lawrence mentioned that we're moving on to markets, but the 3.6 billion seized by law enforcement related to this four and a half billion dollar hack on Bitfinex, would that have any impact on price in crypto?
Don Kaufman:
So I would say absolutely not. It's negligible in the bigger scheme of things. And again, I'm much more a trader. If anything, maybe a little bit of short-term volatility. But I got to tell you, though, it makes for some spectacular news, specifically. And that video that you showed a few minutes ago there, I still have a really tough time believing that that-
Christine Lee:
Classic.
Don Kaufman:
... is going to lead to a hacker. Absolutely classic. That's one that, again, I've got to grab that one, for sure.
Lawrence Lewitinn):
But nonetheless, Don, I mean, we've been reporting that something was afoot in that hacked Bitcoin since February 1st, essentially. And the move up in Bitcoin happened just a couple of days afterwards, so February, was it 6 or 7? It was when things started to really move. Do you think that maybe, I don't want to say that people had inside information or were tipped off, but do you think that maybe that at the very least somebody acted on it saying, "Look..."? And this was something that was going around the internet for a couple of days, for several days, was that, "Hey, something is afoot. And it might be the feds have finally caught that Bitcoin." And do you think that maybe that was sort of like somebody buying on the positive rumor?
Don Kaufman:
Yeah. Again, I really don't feel that that had a lot to do with the price action specifically in Bitcoin. Again, those assets ultimately are frozen at this point in time. I happened to spend 15 years prior to that in the brokerage industry. We've seen really substantial hacks in the past before. But when it comes to Bitcoin, and again, you're looking at the original pricing of 3.6 billion that was ultimately locked down, again, I mean, I can take a look at price action, though, specific to Bitcoin, and you can look at the jobs number from last Friday, the major sell off inside of the US bond market, again, that kind of went entirely around the globe. And that is really where we saw that price action get fast, get furious. It started with, looked like, some short covering specifically in Bitcoin futures, and then just grip hold.
Don Kaufman:
I mean, what I think we saw over the last couple of days, this is like a quintessential air market rally. Now, of course, nobody wants to admit to that, but you have a 50% decline, this explosive move to the upside. We're just kind of moderating right now, possibly waiting for even the CPI number to come out tomorrow. You got to look now at crypto as much more of a mainstream asset class than this autonomous vehicle. Again, I've been trading pretty much most of my adult life. And how often does a trader get a brand new asset class handed to them? Unfortunately, that asset class, though, is in high degrees of correlation specifically with other asset classes including equities, indices, and it's also trading now with the bond market.
Emily Parker:
Don, speaking of correlations, anything interesting happening in the altcoin market that we should be looking out for, anything that you're paying attention to? We talk a lot about Bitcoin and equities, but what's going on in alts that's caught your attention?
Don Kaufman:
Yeah. No, nothing more than just, again, some short-term volatility, very specific to what has happened in Bitcoin. You have to look at, again, I'm much more of like the quantitative, more arbitrage from a background point of view, and I tend to look at the relationship between, again, what is the main force here, Bitcoin or Ethereum, doing versus some of the altcoins? That volatility, though, has almost been a one for one. Again, not to impress that there's not the breakup of correlation that maybe we would've expected in the midst of some extreme volatility. Enough, though, that there is definitely some arbitrage opportunities opening up in there.