Binance CEO Reveals Who Drove Bitcoin’s Explosion—And If They’re Still Buying | Richard Teng

Richard Teng (0:00)

I believe that the demand is still very strong. The long-term prospects are extremely bullish, in my view. If interest rates, especially in the long-term, goes up, it impacts bonds, it impacts equity.

I think it's very favorable to assets such as gold and crypto, right? I think government will be very concerned if AI continue to develop in a way that they cannot quite control and it will rule. I think that is something that, when I speak to policy makers around the world, is something that is starting to bother them quite a bit.

David Lin (0:33)

Bitcoin is holding near $79,000 this morning, September 9th, after rebounding from $60,000 in August. It's already climbed 30% since its July lows. Our next guest is Richard Teng, co-CEO of Binance, the largest crypto exchange in the world. While Bitcoin and the crypto surged in the last three weeks, Binance added more than $2.6 billion in Bitcoin balances.

To put things into perspective, Binance alone added nearly as much in Bitcoin market cap as the entire US spot Bitcoin market in the same period, which is about $3 billion. So what exactly happened in August? Who caused the surge in prices and are they here to stay? Richard is going to walk us through the data and tell us what he thinks is coming up for the entire market. Welcome back, Richard. Good to see you again.

Richard Teng (1:17)

Thanks for having me again, David.

David Lin (1:19)

So Richard, like I mentioned in the introduction, according to DeFi Llama, Binance added $2.6 billion in Bitcoin balances through August, while the US ETF market added about $3 billion. Do ETF inflows and inflows into exchanges like Binance set the price or do inflows follow the price? Which is it?

Richard Teng (1:39)

Well, it was a very good August to start off with. So we have saw faster spot volume growth on that front. Firstly, we saw renewed ETF inflows and we saw increased crypto allocation. So if I bring you back to early August, we are trading about $62,000, $63,000, and then the price that break out around 19th of August, it went to $81,000 by August 25th. And it has been pretty stable since then. So we have moved, we have gained about 27% since then. And this is one of the sharpest rally in the last five years that we saw. But more interesting, if you look at the demand, August ETF inflow reached $3.5 billion that you saw on that front. And that's up significantly from July. July was $172 million. And it's the strongest inflow month since October of last year, which is, as all of you know, is the all-time high. And our spot trading volume for crypto rose from about $5 billion on the daily basis to about $14 billion.

So you can see a significant part of that comes from really renewed spot demand instead of leverage. So all these are positive. We accounted for 46% of the spot trading volume across centralized exchange. You mentioned DeFi Llama again. That data is from DeFi Llama.

So all these are strong positive. The other data point that is very interesting is we have many users now that hold across crypto assets as well as equity assets. And in August, crypto shares of combined holding rose from 64% to about 70%. So you can see increased crypto allocation in August as well. And by end of August, it reached about 72%.

So this rally is pretty broad based, with a few dimension at play, and is an interesting narrative that's forming.

David Lin (3:35)

Let me pull up a chart of the Bitcoin price itself, and then we can comment on it together. So here we have the rally starting in middle of August. Specifically August 19th. And like you said, it was pretty broad based. It's not limited to just Bitcoin. I'm just using Bitcoin here as an example. Bitcoin rally on August 19th. That was the day that the US Treasury Secretary Scott Besson announced that he would intervene in the bond markets if necessary. Doubling bond buybacks from $2 to $4 billion per operation. He later expanded that.

Was that the trigger?

Possibly, the market interpretation that the long end of the yield curve would not go up even more. And if so, perhaps what was keeping Bitcoin and the rest of the crypto markets down throughout the entire year was a prospect of higher interest rates. What is your interpretation of why everything rallied on August 19th?

Richard Teng (4:28)

Well, I think that's one of the issues that could be driving all this, that comes into play. But if I take a broader look at the entire dimension, right? If you look at first quarter, it's a quarter where petrochemicals and commodities traded very well. And second quarter, really, you have equities that traded extremely well. They're very robust. And as you know, different asset classes, when they are slightly overvalued, they will see a pullback in interest. And crypto for the majority part of this year has been in consolidation mode. And news like this, and also news that Carity Act is being pushed through, US is still embracing in a very, very big way all the crypto developments, moving quite aggressively forward with embracing crypto in terms of wanting to be a crypto capital. I think all this makes people sit up, take notice, re-evaluate the entire portfolio to say that, you know, if interest rate, especially in the long run, goes up, it impacts bonds, it impacts equity.