The driving factors behind Bitcoin's recent price surge
Decrypt Editor-in-Chief Dan Roberts breaks down why the price of Bitcoin has risen over the past week and stablecoin regulation.
Video Transcript
ADAM SHAPIRO: OK, 14 minutes before the closing bell. Crypto Corner time. We got to talk about crypto, and we're going to do that with Decrypt editor-in-chief Dan Roberts. Before we get to some of the big headlines, got to ask you, Dan, because this is what a lot of people watching want to know, we got Bitcoin at over $50,000 again today. What's behind it? I mean, a week ago, we were almost at $41,000. Any particular one thing driving it?
DAN ROBERTS: Yeah, I think there are two big things, Adam. First of all, Fed Chair Jay Powell specifically answering a question of, do you aim to ban or restrict cryptocurrencies like China has? And Powell simply said no. So that was encouraging to crypto traders. OK, you know, the headlines said the Fed is not trying to go full China on crypto, or at least, that was our headline at Decrypt.
And then speaking of China, I think that the hangover of China has kind of subsided. That is, it was about a week and a half ago that yet, again, China banned Bitcoin, as they say. And we discussed this last Friday. You know, China kind of re-bans crypto every couple of months now. None of it is totally brand new. It first cracked down years ago in 2014 on mining, and then again in 2017, and then again a year ago, and then again two weeks ago.
So every time that China does it, the price goes down. But now the price has rebounded as people start to realize, OK, nothing has really changed that drastically in terms of China's stance on crypto mining and on Chinese companies using crypto for transactions.
SEANA SMITH: And Dan, one thing that could be viewed as pretty bullish here for crypto going forward is some of the institutional commentary and involvement that we've seen over the last couple of days. I know Bank of America, they were out with a note saying that digital asset sector is just simply too large to ignore. We got the US Bank Corp or US Bank news out today. They're launching a Bitcoin custody service. How significant is this for crypto investors and, really, I guess, the future of taking crypto and making it mainstream?
DAN ROBERTS: Yeah, Seana, the B of A note said crypto is too big to ignore. Not just Bitcoin, so much more. It sounded to me like some kind of bullish haiku about crypto. So [INAUDIBLE] and also, you know, US Bank coming out and offering crypto custody for institutions, which has become a very popular business. It's something that Coinbase has done very well with almost quietly. I mean, we talk more about Coinbase as a retail brokerage-- that is, the place where regular folks can buy some Bitcoin.
But when you offer crypto services for institutions like family offices or hedge funds, what you're really doing is allowing those firms to invest in crypto on behalf of their clients without having to worry and dirty their hands with the tech. You know, there are places now that maybe they're run by people with a certain level of tech savvy or non-tech savvy. And they've decided, we should probably be in Bitcoin, but ugh, I don't want to worry about holding my client's keys and, you know, being in charge of their wallets. Let someone else do it for you. Let someone else do the custody. So that's what US Bank is getting into.
Look, I think the story has been the same for the whole pandemic, which is that mainstream institutions that, in the past, probably stayed, you know, six feet away from crypto are ready to dip a toe in, even if it's just 1% or 2%. And all of that has spurred the price hike that we've seen. The contrast to that, the thing still throwing cold water is the fear of regulation. And every few days, it continues to loom. And every few days, you hear new comments from Gary Gensler.
But what I keep telling people is just because Gary Gensler and the SEC have made it clear they want to regulate crypto doesn't mean they're going to shut it all down. He's not saying I want to shut it all down. But he thinks these assets should be regulated.
ADAM SHAPIRO: And yet, Dan, I mean, the article at Decrypt that you sent us about the SEC going after Circle and stablecoin, USDC-- and you also explained at Decrypt what USDC is and the history of that-- when I was reading both articles, I kept thinking, well, how is this really much different than people who trade currencies? I mean, why is the SEC doing this, but not going after currency traders?
DAN ROBERTS: Well, right. I mean, that's a fair question. And what Gensler said, which I think also sounds rather reasonable, is, well, these stablecoins that are pegged to-- and they don't call it Fiat, but the term in crypto has become Fiat to mean government currencies. Those are regulated, in certain ways, by a number of different agencies. Why shouldn't these digital assets that use as their whole basis these other Fiat currencies be regulated similarly and be held to the same standards?
And I understand that. You know, Circle created USDC along with Coinbase, so it was this open source consortium called Center. And I think that the reason Circle is the one that was subpoenaed in July-- and we don't know who else was subpoenaed. But that's because right now, USDC is kind of the standard bearer of stablecoins. There's also Tether, which has really come under fire and, you know, has had a lot of questioning of its backing. Does it really have the cash assets in full reserve that it claims to have?
But basically, USDC and Tether are the top dogs. And then there are a number of other hot, fast rising stablecoins. And again, Gensler looks at those, and he sees them as assets that ought to be held to the same standard as the currencies or government assets or, in some cases, gold that we also monitor and agencies have certain say over.
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