$75-100K Are Feasible for Bitcoin, But Tread Carefully in Exuberant Times

Antoni Trenchev, our Co-founder and Managing Partner, joined Amanda Lang and Matt Miller on Bloomberg Markets’ ET slot yesterday to talk Bitcoin hitting $50K – a prediction he made on Bloomberg on January 3, 2020 - and what lies ahead for the digital assets industry.

Watch the full interview here or read the highlights below:

• Now is the time to halt excitement over BTC’s soaring prices and pay close attention to market sentiment, reactions to events, fluctuations, and the leverage and credit in the system to understand where Bitcoin is headed and how to best position investments.
• Running a successful business like Nexo in crypto’s volatile environment is dependent on having the correct conservative perspective for your business model.
• While $75K and $100K are very feasible targets for Bitcoin, investors should be cautious and prudent as it’s likely to be a bumpy ride to such high prices.
• Bitcoin is essentially a better version of gold because of its scarcity, finite amount, and transferability. As such, there will likely be an outflow of funds from gold into crypto.

Speaking of gold, here’s an exclusive snippet of information from Antoni about the factors he considered when formulating his $50K prediction last year:

• The macroeconomic environment (even before COVID-19)
• The bear market for BTC over the past three years
• Negative sentiment towards BTC for a currency that tends to rally and bounce in such situations
• The Halving, which reasserts BTC’s programmable scarcity
• The estimate that Bitcoin would capture 10% of gold’s $10.6T market cap

As Matt Miller said to Amanda Lang before they went live yesterday: “A lot of people thought Antoni was insane” when he predicted that Bitcoin would reach such heights, but “now a lot of people are going to want to listen.”

We now urge you to intently listen to the market and look beyond the current Bitcoin craze. Although the crypto bull run is going strong, it is our responsibility as a community to ensure it does so sustainably and in the long term.

Transcript

Amanda Lang (00:00) This is Bloomberg Markets, I’m Amanda Lang alongside Matt Miller and it was Matt Miller who conducted an interview about a year ago with a guest that said Bitcoin was going to $50,000, Matt, and at the time that seemed bonkers even though it was already at $7,000 and that seemed bonkers to some. Now, of course, Bitcoin has surpassed that level, so the doubters are definitely in a dwindling camp, I guess we have to say, when it comes to Bitcoin and it’s value.

Matt Miller (00:32) Yeah, but they remain, I’d say, Amanda, you know I started covering Bitcoin over ten years ago. And people thought a thousand dollars was just a nutso target. When it hit a thousand dollars, I went two weeks living on only Bitcoin, I didn’t spend dollars for two weeks. And it worked out pretty well but it came off that price, everyone said “Oh that was a bubble”. Then it went to $20,000 in 2017 and people thought the world had just lost its senses. [It] came back down, and that’s when Antoni told me at about 7 grand, it would hit $50,000. Now it has, let’s bring him on, Antoni Trenchev, Co-founder and Managing Partner of Nexo. You now have $5 billion of assets under management, you have a big Bitcoin lending business and you have to admit this is at least a rubber bubble right. There is a lot of volatility and has been historically in bitcoin. Isn't that difficult to run a business with that kind of volatility?

Antoni Trenchev (01:36) Well not in the past year. At the very least. But kidding aside it is the best performing asset on any significant timeline whether it's one year, or five years, or 10 years, it’s the best performing assets. So it is a matter of having the right perspective when investing in Bitcoin. And that's how we build out their business very conservatively. We lend only a loan to value ratio of 50 percent precisely because of its volatility. And we structured the business that thrives in bold bull and bear markets.

Amanda Lang (02:10) I'm going to keep myself in the doubters camp just out myself to both of you and the world here. My concern with Bitcoin is it's impossible to know how to value it other than what the next guy is willing to pay for it which always gives you pause. Now the counter argument often offered up, Antoni, is that's the same as gold. The JP Morgan call on Bitcoin 146, 146,000, or the dollar, I guess. Well let's not go there. That JP Morgan call, though, was predicated on the idea that Bitcoin would trade like gold. Do you think it's still going to go there that it'll be treated the same way that gold is treated?

Antoni Trenchev (02:47) I think that actually Bitcoin is a better version of gold because it has the necessary characteristics – scarcity of fixed, finite amount. With Elon Musk taking us to Mars, apparently there is a bunch of gold there. So we might see some you know inflationary pressures on gold. But I do think that Bitcoin is actually a better version because next time you travel to Europe, try bringing a million dollars in gold versus the same amount in Bitcoin. It's much better in so many ways. So I think we're going to see outflows from gold into crypto and it is a totally new asset class like something like we've never seen before. And it's here to stay and.

Matt Miller (03:36) And, Antoni, I'm going to push back a little bit against that because you know I was thinking the other day when this Arctic frost came down from the great concavity and shut down Texas. You'd rather have gold in that kind of situation than Bitcoin, right? I mean, especially if the cell phone network goes down you're not going to be able to buy anything with your ones and zeros unless, of course, you just remembered them off the top of your head. Isn't there a situation, isn't there an argument to be made for gold when it really comes, when push really comes to shove, when you have to grab your bug out bag?

Antoni Trenchev (04:16) Well, I am a gold bug, have been for the better part of the past decade. But you've got to consider the counter argument. It is that if you invested a dollar in gold a year ago you have about $1.70. If you invested one dollar in bitcoin ten years ago you have around twenty five million dollars right now.

Amanda Lang (04:41) I guess the other side of this argument, and I know where Matt's going with that, it's not just gold you want to own in that scenario it's gold coins so you can actually go buy things with them. That's called the End of the World Trade. It only works once in terms of the cryptocurrencies. Here's my real question for you is why do we need digital currencies other than the digital currencies that we have? I haven't touched a paper dollar bill or five dollar bill in I don't know how long. Everything I do is digital. It just happens to be the one that my central bank manages and my bank manages for me. What's the purpose of a cryptocurrency other than for use, as our central bank said in Canada recently, on the dark web for fraudulent activity? All of the reasons we know people like.

Antoni Trenchev (05:23) Well first of all, the number one choice for money launderers and the criminal’s syndicate is the dollar. So there is no beating around the bush around that fact. But more importantly we need crypto, and in particular Bitcoin, because there are 3000 other crypto currencies which we're not super excited about. But what sets apart Bitcoin is the fact that precisely your central bank cannot print it at will. And this is something that we've seen being done on a massive scale last year. I think close to a trillion dollars have been printed and you can feel the creeping inflation. It's palpable everywhere. I was in London some time ago and I paid for the exact same meal that I paid as a student 10 years ago, twice the pound value. So obviously in this inflationary macro pump money printing environment that people will be searching for alternatives and Bitcoin is our generation's gold. And it's obvious that we millennials, the next generation to be the main driver of the economic cycle, are taking such an interest in Bitcoin in particular.

Matt Miller (06:37) I say it's a good point on the dollar right more hitmen drug dealers evil dictators have been paid in dollars than any other currency. The inflation argument, though, I wonder if that can come and bite you back and I mean if we start to see it retail spending was off the hook today, if we start to see the Fed get worried and go the other direction, does that mean Bitcoin, does the air get let out? Do we all of a sudden see it drop down to thirty thousand twenty thousand fifteen…?

Antoni Trenchev (07:07) We could very well see a correction of 50% and that wouldn't have an effect on the long term bull market of Bitcoin like thirty thousand. That was a month ago and now it will have to crash almost in half to get there. You know about Bitcoin, it's really taking in the right time horizon. You have to have some because of its potential and the way it has performed historically but also caution is advised at these levels where the total market cap of Bitcoin is above a trillion. You know, you don't put your kid’s college funds solely at once in Bitcoin because there are some inherent dangers. So right now, I'm not super excited about particular price levels like last time when I told you $50,000. I am watching right now the feeling the market that it's giving me, how it's reacting. It’s $75,000 which will be the next logical stop. What's the leverage and the credit in the system and what's the overall exuberance of the market’s participants. And this will tell us where Bitcoin is going next.

Amanda Lang (08:20) When you made that $50,000 call you said by the end of the year. What's your timeframe on $75,000, Antoni?

Antoni Trenchev (08:28) I haven't brought my crypto crystal ball today. I think that we are accelerating towards $75,000 right now and it's really going to be a question of how it reacts there. Ultimately, I think we are going to go much much higher. $100K is very realistic in the next 12 to 18 months, but it is not going to be as smooth a ride as my last year prediction. Simply because of the fact that a lot of people are calling it right now. And last time we talked about it, it was just me and Matt who you know were even considering such scenarios and the markets. never do what everyone is expecting them. So caution again.

Matt Miller (09:15) Alright, Antoni, we’ll get our $100,000 hats ready. Amanda, we’ll get you on too, even if you’re a doubter

Antoni Trenchev (09:24) Absolutely

Amanda Lang (09:25) Maybe it’ll be 100,000 Canadian dollars. Antoni Trenchev, great to have you with us, appreciate it. Antoni Trenchev, CEO of Nexo.