Bitcoin Whipsaws as Traders Brace for New Year Rebound

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2:28We're joined by Bill Barheit, CEO and founder of Abra, a global platform for digital asset prime services and wealth management for high net worth individuals and institutions. So if you're Abra, Bill, I'm tempted to ask, when is the Kadabra coming and is it next year? Good question. Good to see you. Thanks for having me. Look, there's a lot of things that, as they say, history doesn't necessarily repeat itself, but it often rhymes. There's a lot of things going on that feel like 2020 to me. We had a market crash at the beginning, COVID-induced. Here we had, you just brought up a crash in October, which was induced by the initially the 100 % tariff announcement on China, but also some serious issues that were uncovered afterwards in one of the large exchanges internationally.

3:21And then, you know, gold rallied, right? In 2020, gold rallied from, I think it was$1 ,400 to$2 ,000. Silver rallied from about$12 ,000 to almost$30 ,000. Bitcoin stayed in a range at that point, and it's trading very close to where it started the year right now. So a lot of this sounds familiar. But by the way, after gold peaked, we had a rotation into risk assets in 2020, and Bitcoin went on an epic run from$12 ,000 to over$60 ,000. And the market cap of the entire crypto space went up by 8x by mid-2021. So now gold is near record highs, around$4 ,500. Silver is around$80. Bitcoin has basically been sideways this year.

4:10I actually think it went up significantly after the election because it was front running the idea that all of the regulatory obstacles to adoption were going to be removed, which has proven mostly true with additional legislation pending, right? We talked about October liquidation events. So it feels like with the Fed and other liquidity catalysts, 2020 is going to repeat itself in 2026. Rate cuts, leverage reserves in the banks are likely to get really relaxed, which means more leverage. Again, regulatory clarity, ETFs, et cetera, et cetera. Hey, Bill, one thing I do wonder, I mean, you guys are a platform.

4:56You see things, you see investors, what they are doing, high net worth individuals, also institutions. Talk to us about activity, more money coming in, more money going out. Give us some color on what you are seeing on your platform. Sure. So I think we're seeing a rotation. There's two types of rotations we're seeing. The first is there was a well-known investor who referred to this as Bitcoin's IPO moment. And what I think he meant by that is we had people who've invested in Bitcoin 10, 12 years ago who were taking a little bit of profits, let's say 15, 20 percent profits. That's a lot of money because those people have massive concentrations.

5:35Their entire wealth, if you've been holding for 10 years, is probably based on Bitcoin. And so that IPO moment represented a bit of a rotation. Now we're actually seeing a rotation where a significant percentage of Bitcoin is no longer being held on exchanges. So we're not an exchange. We're a wealth management platform. It's like another RIA. So money coming in to a platform like ours tends to stay there for a very long time, stays in cold storage for a very long time. Now we're seeing a lot of clients asking to be able to borrow against those Bitcoin holdings because they think that it's reached a long term floor with significant upside.

6:10Some of your customers not getting a little scared, though, Bill, because, I mean, it is extraordinarily volatile at the best of times. But just in the last three months, as we can see, we're down, you know, 25 percent. Sure, we're higher than we were, you know, before the president took office. But still. Yeah, no, that's that's not a that's not that's a trading phenomenon. Right. So in our world, first of all, in video points this year was in Tesla rule, we're significantly more volatile than Bitcoin. I would also posit that. Right. It's it's traders that drive that price. The incremental float that's available for trading in Bitcoin is not nearly as big as it used to be because so much of it is locked up now, whether it's ETFs or in platforms like ours.

6:51Our clients are long term holders. They don't sell. And the rotation of money out of our platform is nearly zero. And that's not just a function of the fact that they like our service, which I'm sure they do. It's that, you know, our clients are just not interested in selling Bitcoin. The biggest question I get is what would I possibly sell into? It's the best long-term capital gains potential asset that I own. And they're not speculators, by and large. What's important that you see from the administration that continues the support of Bitcoin and other cryptocurrencies? We certainly know we have a White House, safe to say, that is very favorable to the crypto environment.

7:30The president's family is certainly involved in it. But what is it that you expect in terms of the environment? They're still trying to figure out regulatory. there's still a long ways to go. Does that get solved in 2026, especially when you've got midterm, you know, midterms looming and maybe Congress coming back to kind of assert itself? Good question. I see three things happening. The first is we're going to get a second bill passed. In my opinion, we got the stablecoin legislation, the Genius Act passed, which I think was pretty reasonable. We're about to get the Clarity Act out of committee, I believe, which is going to be the biggest overhaul in many ways to securities and commodities regulation in decades, which is going to make it easy for the second part of my thesis, which is the tokenization of everything.

8:18So you're going to see markets globally, including the U.S., start to adopt tokenized versions of equities, commodities, real estate, et cetera, et cetera. And then the third, I think you're going to see more of the same as it relates to global and specifically U.S. debt markets, right? See, I have a problem with this, Bill, because I wonder why replicate and why would you buy the replica when you can buy the real thing? I wouldn't buy a replica. So that's a good question. There's a nuance there. So the early days of tokenization are going to be tokenizing existing shares, which has a little bit of value, which I'll explain in a second.

8:54But the real value comes in native tokenized equity issuance. And that has huge advantages. The first is stock markets are closed more than they're open. Okay. Crypto markets don't close. So now all of a sudden you have the opportunity to have a 24-7 borderless market, right, that is 24-7 liquid, which is what investors in 2025, 2026 want, in my opinion. Right. That's number one. Number two, as I mentioned. Bill just got about 30 seconds. So I just want to give you an opportunity to wrap up. Go ahead. Yeah, sure. And then the second part leads to what I said before. What is the fastest growing service we see?

9:33It's people borrowing against the Bitcoin. If you've tokenized Apple shares, Tesla shares, it's now just as easy to borrow against the value of those shares without having to pay capital gains taxes as it is against Bitcoin. That is going to drive the tokenization of everything. We will continue this, no doubt, in 2026. Bill Barhyde, he's founder and CEO of ABR, joining us.

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