September Markets in Focus: Bitcoin's Breakout, Small Caps + the Fed's Rate Move

SPEAKER_1 (0:12)

Welcome to another episode of our Markets in Focus series. And joining us, as he always does, to talk market trends and market movement is Phil Rosen. Phil, thanks so much for joining us. Happy to have you here.

Phil Rosen (0:23)

Thank you for having me.

SPEAKER_1 (0:23)

So Phil, let's start with Bitcoin, and its price has increased almost 30% as of late, climbing from what was once a price in the low 60,000. So first and foremost, take us through this breakout. What do you think is actually driving it?

Phil Rosen (0:37)

So once Bitcoin starts moving, it's very hard to catch. And we've seen that in the last few weeks unfolding. And I've had a bunch of friends text me, is now the time to buy Bitcoin, is now the time to buy Bitcoin. And I always say yes, because frankly, I think any day is a good day to buy Bitcoin, because if it starts moving, you're already gonna be too late. So you might as well get in yesterday if you can.

And what we saw in August, right when the Treasury announced its expanded buyback program, Bitcoin went up, I believe it was 7%, and then 5% the next day, and then 7% the following day. So that 30% gain that you just mentioned in a month, most of it came in a three day stretch right after the Treasury made news that they would expand their buyback program. So to me, Bitcoin loves that news. That's a great sign for hard assets. And I think Gold has seen a similar uptake in the last month.

But then at the Jackson Hole speech for Kevin Warsh, Bitcoin actually had its worst day right after Jackson Hole. So you have this sort of push and pull between the Treasury being suddenly a bullish tailwind for Bitcoin and then the Fed being sort of this obstacle that it has to figure out. And I think a lot of that stems from the uncertainty around what the Fed's thinking, what Kevin Warsh is thinking, the lack of forward guidance. But generally, I am very much in the camp that buying Bitcoin is, it's like the old proverb, the best time to plant the tree was 20 years ago. The second best time to plant the tree is today. So I think Bitcoin, it's going to go up for the long term. I'm bullish. I've stayed bullish on it for a long time, even through 50% drawdowns. And I think we're on the upswing now.

SPEAKER_1 (2:18)

Yeah, so you're right. You have stayed bullish through even the turbulent times of Bitcoin. And I think there was this belief among investors that the dip that we obviously saw as of late was just sort of like a small moment in the much larger life cycle of Bitcoin.

How should investors now treat this most recent rise? Should they treat it as the same? Is this sort of also just a small moment in the larger life cycle? And you mentioned monetary policy before too. How has monetary policy impacted this increase that we've seen?

Phil Rosen (2:49)

Those are great questions and they pretty much come up every day of the year around Bitcoin because on one hand, you can see it as the ultimate liquidity asset. So it responds to what the treasury is doing, what global investors are doing, and it trades 24 seven. So it's like the only indicator we have around the clock. But on the other hand, you can say the four year cycle is still in play. It follows a predictable path every four years and you should try to time it in that sense.

I'm pretty agnostic to whatever philosophy you have of Bitcoin. I believe that the government will never stop its fiscal irresponsibility. So Bitcoin will always go up. And I'm not in the game of guessing prices on any given date. I don't know what Bitcoin is gonna be tonight, tomorrow, next week, in a year.

I know you see guys like Michael Saylor come out and they say Bitcoin is going to a million dollars. I have no idea when that might happen, if it could happen. I do know it's going much higher over the coming years because the macro tailwinds, mostly government money printing and debasing of the currency, those things will never stop. So even if we look at the day to day, we look at the news cycle, sure, there might be some catalysts that we can point to, like the Treasury, but at the same time, I think you can just focus on currency debasement and feel pretty good that Bitcoin will go up long term.

SPEAKER_1 (4:19)