 Hi everyone, I'm Giovanni. Welcome to another coin telegraph live stream. The topic of today is of course Elon Musk's latest bombshell and its consequences on Bitcoin and reports around Binance under investigation from the IRS in the Department of Justice over alleged illicit trading activities. So let's start with the first one. For those who don't know, yesterday Tesla announced it will no longer accept Bitcoin as a payment method for buying Tesla cars out of concerns over the carbon footprint of the main cryptocurrency. As a result, Bitcoin crashed down to around $46,000. It bounced back since then, but not completely recovered. Elon's move sparked a number of questions. So why did the Bitcoin supporter like Elon Musk made such a move and how are the crypto markets reacting to this announcement and what kind of long-term consequences this move can have on the crypto markets? So to answer these and more questions, I have the pleasure to be joined by Scott Malker, professional trader, Mike McGlone, senior commodity strategist at Bloomberg and Marcel Pechman, market analyst at Coin Telegraph. Thanks for joining us in this show, guys. Thank you. Awesome. So let's get straight into it. So what is the rationale behind Elon Musk's U-turn on Bitcoin? First, I would like you Scott to give us your view. What sense do you make out of it? Well, I have the realistic views and the tin hat views so we can do either one of those, I suppose. First of all, I think it's absurd that it's affecting the market, but that's just sort of the nature of how it goes. With Bitcoin in any market, we're seeing when the news comes, it just starts to pile on and you get negative news after negative news after negative news. I think that there's probably four to five disappointed people in the world who would have actually been dumb enough to buy a Tesla with Bitcoin to purchase a car that loses 25 to 30% of its value. The second, you drive it off the lot with a beautiful deflationary asset and take the taxable sale of Bitcoin to do so, basically making your car twice as expensive as it needs to be by the time you drive it off the lot. So I think that it's just, it's a bit of a head scratcher. Obviously it doesn't make much sense logically. We've seen Elon Musk interact with Jack from the CEO of Twitter about how, Bitcoin is a good opportunity for the renewable energy industry. We know that everything has a carbon footprint. He's gonna accept dollars. The banking industry has a larger carbon footprint than Bitcoin. I don't know why he did it, but I think it's effectively irrelevant unless you just are concerned with the symbolism. Honestly, my takeaway from his tweet was Tesla is not selling their Bitcoin. And that's what I read in the third paragraph of his tweet and was the thing that was most noticeable to me. Yeah, we're not gonna take payments in a while. Probably nobody wanted to pay for one anyways. Yeah, and by the way, Scott, you were also waiting for your Tesla if I'm not mistaken, right? Yeah, yes, I figured that the Messiah will return before I potentially get that car. I bought it in January. The date was March. It was punted to April. And now it's indefinite with a potential delivery date of November, December. So personally, I'd rather him stop talking about Bitcoin and start making Model Xs, but you know, that's my own situation. Okay, now, Mike, what's your take over this Elon Musk's decision to not accept Bitcoin as payment? What's your view on this news? Well, that's one problem with having me and Scott sometimes on. We agree too much. So I'll just add it to, I'll expand on it. I think it's one thing we need to always look forward. This to me is a test of the market akin to what happened when the New York Attorney General cracked down in Tether in April, 2019. Market corrected. It shuttered a little bit and it found its legs and it recovered. That's what I expect. So below 50,000, I see Bitcoin responsive buyers probably coming into space. I don't see it getting much below, maybe gets a 40 and a major risk off, but Bitcoiners are used to that. And I think it still ends the year or starts heading to 100,000. The key thing to think about what's what Elon Musk did, he accentuated the strength of this network. Both Bitcoin and Tesla's use energy. They harness energy. That's part of advancing humanity. They use electricity. And so what's the difference between Bitcoin using electricity and a Tesla using electricity? Bitcoin goes to where electricity is cheaper. It's basically a cheapest. It's a governor in the space. When it's cheap someplace, it goes there. When it's expensive someplace, it doesn't go there. So it's one thing to remember, Tesla's don't do that. Tesla vehicles just take electricity where they need it. And I think going forward, this is a dip in the trend. And as Scott said, it's not Tesla selling their Bitcoin. I mean, can take some profits. But I look at it as a dip and it's a sign of the strength of Bitcoin. Bitcoin is strong like an aircraft carriers because it harnesses that energy. Well, it's largest decentralized network on the planet. Yes, but it's decentralized. And it's also one of the sources of this electricity. Well, increasingly it's coming from renewable sources, most notably solar, gas flaring, wherever electricity is available and cheap. And it can be in remote areas. They can't do that with most other sources. So I view this as a positive, it's a dip in the trend and been looking for a good reason for market to dip and to stay down. To me, this is a good reason for it to dip and to go back what it's been doing for most of its history and that's recovering. But then I pass it back to you. Yeah, and actually that reminds me of a statement by Mike Novogratz, if I'm not mistaken, who today said that his interpretation of what happened is that Elon Musk did this in order to advance Bitcoin towards a greener future. So he did it for the good of Bitcoin according to this interpretation. So like trying to stimulate Bitcoin, counting more and more on renewable energies instead of fossil fuels. But now I would like to know what Marcel thinks about this piece of news. What was your reaction Marcel? Okay, Giovanni. So as they said, my first question was, okay, this guy is speaking nonsense. He probably didn't spend enough time studying why we need the proof of work system which uses, consumes energy. And this energy can, as Mike said, can come from any meantime, it can come from clean energy or it can come from coal. So Bitcoin, the protocol or the currency doesn't have anything to do with that. Other than that, what worries me is that Elon Musk said that he's gonna look for alternatives that spent maybe 1% of the energy that Bitcoin consumes. We're talking about one of the wealthiest guys in the world, maybe the best engineer in the world we have ever seen. And I think we'll probably know the answer in six months to one year because he's gonna try to come up with a solution for a cheaper source of energy or whatever cleaner. And he probably won't find it, not six months to one year. Then after he spent so much time researching and trying out stuff and coming back and still owning Bitcoin for Tesla balance sheets, that this will be the definitive proof that the proof of work is the only way, the only solution to handle this decentralized form a $3 billion currency. So for now, it's worrisome. This guy is a genius. He might find an alternative. Bitcoin might even implement it. Bitcoin is a protocol, it can change. If a new solution is found, we can alter the protocol. It just needs the users to update the software. But I don't think he's gonna find it, but it's gonna take six months to one year until the news break out that, okay, sorry guys, can't do it. Proof of work is the best. Yeah, and it's interesting to kind of analyze Elon Musk's personality because it seems that he's been used to moving the market quite a lot in the last months and years. He even made the stocks of Tesla crash when he said that they were overpriced and he moved up the market when he bought Bitcoin and when he praised Dogecoin. So a lot of people now are a bit pissed with Elon because they say that he's an irresponsible guy, that he's like abusing his own power. What do you think of this kind of criticism towards Elon Scott? I think it's stupid. I think Elon Musk can do whatever he wants and they can chase him till the end of time, but the fact is he's an individual with a social media account and he can have fun with that social media account as he fits. And it's an indictment of the market, not of the person if it really reacts that aggressively to a single tweet from a single person about something that has no real relevance on price. As I said, whether you can buy a Tesla or not, it's effectively irrelevant. So I don't believe that's what's moving the market right now. I think that it was a catalyst for a move that was impending either way that you could see coming. And to Marcel's point, he was talking, sorry, just about the proof of work. I don't think necessarily, and that was when I was saying my tin hat theory, maybe my tin hat theory wouldn't be that he's gonna try to change Bitcoin, but that he probably has a plan in place to save it himself with a renewable energy or a better energy source would be my tin hat theory. Go ahead and say, hey, we're not gonna do this and then in a few months, he has a solution for how Bitcoin can run on renewables and at his gigafactory or something. But yeah, I don't think that Elon Musk has a right to do whatever he wants as an individual. What it chooses to do with that is up to him. Yeah, actually it would be great if he managed to solve these problems. So a lot of Bitcoin critics would just stop criticizing Bitcoin. But my question now is more related to, so how is it possible that he realized the characteristic of Bitcoin being energy consuming only now? So I guess that he made a bunch of research before investing into Bitcoin. So how is that explainable, Mike, what do you think? How could it find out just now how Bitcoin works? Well, I think the prudent thing for us to do is to focus on the future and what this means and how to react rather than trying to figure out the mind of Mr. Musk. And I think it's very important to point out that Tesla allocating part of its equity wealth, this is the world's largest auto manufacturer by market cap. That didn't exist to basically a decade ago. Makes a lot of sense, prudent sense to allocate to this world's asset that's a revolutionary asset, just like Tesla is, that's a wellness way of becoming a digital global reserve asset. Now, part of that means it uses energy, so do Tesla. So to me, this is just part of what's happening in the space, why he did that, I don't care, but I look at these kind of things, they're just like Nishi says, sometimes markets need to probe and they need to prove weakness or strength. And to me, this is a good test for Bitcoin to prove its strength, I fully expect it will. So looking back from the future, I think we're gonna look back at this and say, okay, the market dipped and then it recovered and it just said, thank you, just like it did in 2019 when the New York Attorney General came down on, sorry, got rid of that, New York Attorney General came down in Tether and that's the way to look forward to it. So what's really gonna mess up Bitcoin from here? This whole narrative that uses a lot of electricity is just wonderful, it's like saying now, defalination uses too much electricity. All that electricity is getting cheaper and cheaper and cheaper and it's becoming all renewables, just a matter of time. And so I look at it as this is a great excuse for a dip, this is probably a good dip to buy, it's a question of how much you're gonna risk. And then looking forward, I fully expect to look back at this from the future and say, yeah, that was part of the dip we were kind of faring and looking for. And by the way, did this end the narrative of the whole world of money managers, treasuries, pension funds endowments, sovereign wealth funds and family offices allocating to Bitcoin? No, I don't think it really changed that narrative, they all been looking for a dip and they're gonna look forward and say, okay, yeah, we all use electricity, we all harness energy, how and what source of that is what matters. So it determines whether it's green or not and all electricity is going greener, it's just a matter of time, i.e. the cost for producing electricity from that solar is now cheaper than natural gas, just the storage. That's interesting because in my view, I was a bit concerned that, I mean, my interpretation of that was that Elon Musk realized that there is a lot of pressure around the firms right now in order to be environmentally responsible. And so he decided to make this move also because of this pressure that are put on big companies like he is. Yeah, I love that narrative. What does the Tesla use for power? The same thing that Bitcoin uses, electricity. Right, right, but so you're not concerned that this could also prevent other big investors from investing into Bitcoin? It may, but I think they'll look to the bigger picture like things like Jeff Booth points it out and that's gots well familiar in the price of tomorrow as all this, it's a source that matters and all the sources electricity in the future are all going renewable because they're cheaper. Now, I'm just one simple example. My son runs a Bitcoin node and we have solar panels. It's just simple technology now that's just getting cheaper and cheaper. So yes, this might be a problem for a while, but I think, you know, Bitcoin survived a thousand cuts and this is another cut. And as a Bitcoin follower, I get used to these cuts. And again, my outlook for this year initially, from last year was 50,000 was a good target resistance. So right now I see Bitcoin right around 49,000 on the screen, it's only May. So it's already made a new high. So I don't view this as a peak, I view as a dip in the bull market. Okay, that kind of remind me of the mainstream media. You, Mike, are also a representative of the mainstream media being like the senior commodity honestly at Bloomberg, but you are unusual in terms of your positions on Bitcoin because most of the traditional financial media tend to be far more critical. So while you have more of a positive stance and I remember that today I read a comment by one of the reporters from the Financial Times who was saying that the news for Bitcoin are always positive or at the worst neutral. So there are no bad news for Bitcoin and it seems that every time something like this happened, we can always find some sort of positive narrative to explain it. What do you think, Mike, about this? Sorry, I think that's right. The key thing about what I do here is I enjoy, I'm Bloomberg intelligence and sometimes I work, I always contribute up to the media, but I use a lot of times the things they say to write the opposite comments in terms of my outlooks. For instance, sometimes I'll write somehow, Crude, I'll just enter a bull market, I'll point out, oh, okay, then I'll write a bear's comment because it's great and then they'll get me on and I'll point out why. Because there's a big difference between reporting the news and what I have everything I do is having an outlook. And that's why I always look at everything as about what has happened, what does this mean for the market? What does this mean for the outlook? And that's the key thing I focus on and that's the key thing they bring me on, extemporaneously on media to respond to. And I look at this as, okay, looking forward, this is a dip in the trend, is this change in the narrative? No, has energy and every time we get a decent rally and every time it's just like gold bugs, every time the gold market goes down, there's complainants manipulation. When Bitcoin goes up, you always hear these problems about all the energy it uses. And I like to say, why is the US aircraft carrier powerful? Because it harnesses the energy of a nuclear reactor. Why is Bitcoin so safe and unique is because it's harnessing energy. And to me, that's what's going forward. So again, I look at also in this issue with the probe of Binance by the US government, that might take months or years to come out, but it's good in a way because it's adding regulation to the space. It's one thing that I've noticed a lot of crypto people, they need to pay their taxes. Sorry, a very simple sympathy for people who make money in capital gains and don't pay their taxes. And if the government cracks down on them, sorry, that's what you, lesson I learned as a young kid in the trading pit. So remember, my brother wasn't paying his taxes and guess what? This was in 30 years ago, they went to his checking account and took the money. So that's just what happens in the world. So to me, this is a big picture, dip in the trend. It seems we're supposed to expect and as things Scott and I discussed a lot and it's the question of where it goes forward and I fully expect that we'll survive. But you know who knows, Bitcoin maybe gets to 40 first and sometimes that's the best way, like I said, to look forward to the defined markets is tested and we're being tested right now and I expect it to pass. Okay, and now I would like to get a little bit more of a technical perspective on what's going on in the markets, in the crypto markets right now. So maybe Marcel can give us his perspective about the impact of these news on the markets. So what are we seeing right now, technically speaking? Sure, Giovanni. First of all, I agree 100% what Mike said. The news itself doesn't move the market. What moves the market is the investors fear or panic when they start thinking well, maybe other companies will not buy Bitcoin anymore because it's part of the mining process uses cold energy. So you have to step back from the keyboard and think is that news? Does that change the view that I have fundamental about the asset? And the answer is no, it doesn't. Everybody knew about this problem and it's not a matter of saying to the miners, well guys, you cannot use cold energy anymore. The Bitcoin network is completely decentralized and nobody has control over that. You cannot ban miners. And anyway, so watching from a technical view when I see the, for example, the futures contracts premium they had been low for a while, indicating that for a while, I mean for the last couple of two or three weeks indicating that professional traders were not like keen on using leverage to buy futures contracts for Bitcoin. But that's pretty standard as if you see the monthly, the yearly gain. We started the year around $30,000 and we were at $56,000. So it's pretty natural for pro traders to step back and say, well, I'm gonna maybe wait for a dip, take profits over here until something comes out. Maybe an ETF in the United States or maybe a regulatory comments remarks from Elon and from the SEC. So yeah, there was some potential negative news to come out. So professional traders were not keen on buying using leverage. So people say, well, but a billion dollars of futures were liquidated. What happens is that when you use too much leverage and the price goes down, the broker might forcefully sell your position. So this aggravates the problem and makes the market go even slower. It's called liquidation. So a billion dollar liquidation seems much, but the open interest for the Bitcoin futures is $25 billion. So we're talking about 5% of the contracts got liquidated. It's mostly retail traders or some, I don't know, heavily leveraged positions, but the majority of the futures contracts are still open. We have over $20 billion of open interest, which is pretty strong. It's, Mike can give us inputs about other markets, but $20 billion is pretty strong. So I think that the market reacted nicely. 12%, 15% draw down in a day for Bitcoin, whose daily volatility is 5%, it's nothing out of the norm. And if you monitor the weekly or the monthly charts, this movement was nothing out of the ordinary. And if we reclaimed the 50, 52,000 in a week or so, it's gonna be a pretty bold and strong move for Bitcoin. So technicals are strong, nothing changed. Awesome. Thanks, Marcel, for putting things into perspective. I also noticed that if you look at the chart of Bitcoin in the latest couple of months, this looks like a dip, of course, but nothing out of the ordinary. So even like visually, the chart of Bitcoin seems quite fine. Now I would like to know Scott's view on the technicals here. Do you agree with Marcel's vision? Yeah, I think that even with this drop that technically, if you look at it, we've basically been ranging between 65,000 and 47,000. And when you lose the mid range, you expect to test the bottom. And for now, I can't say what's going to happen because I agree with Mike that it's very possible that we could go lower, you know, 40, 42 and test those areas that were sort of untested. But for now, we've seen the lows swept and priced back in that range. So it'll be interesting to see how it plays out over the next hours and days. But, you know, anyone who follows me knows that I love looking for a bullish divergence with RSI and we have that on the hourly, potentially on the four hour, potentially on the six hour. So we'll see how that builds. But, you know, we're pretty oversold if that's a metric that you use. So even if we do go lower, it's likely that we'll see some relief first in this area. But I mean, I've noted that when we dropped from 65,000, you know, in the middle of April or so, the volume was much higher than on this sell-off, much higher. Like probably almost double on most exchanges. So this isn't that impressive of a sell-off when you look at it from that perspective, at least for me, just visually on a chart. So for now, I just think that we're kind of testing the lows and seeing what happens if we drop, then we start looking at those lower areas that Mike discussed before. But nothing's really worrying me here at all. Mike, would you like to add something on the technicals? Yeah, 60-40 range until the cows come home. We might not even see 40. I think we're more likely to sustain about 60 by the end of the year. And I don't like to look at it in a day trade. It's a good way to lose your hair. And believe me, I know that because that's an environment I came from called bidding offer, one, two. I'm bidding one, two. That's what you do in the trading pitch. You bid an offer. And I just encourage people not to do that. I've learned the hard way. So here's one good narrative look at it is, to me, one of the defining milestones this year was when Tesla allocated part of its wealth to Bitcoin. That happened in February, the announcement came out February 5th. And since then, Bitcoin's up about 30%, maybe 28% now and Tesla's down 30%. I fully expect that to continue. I don't see why I fully expect it because also the price of Bitcoin has been outperforming Tesla for a long time. And one thing that happened last year and still as a case is volatility on Bitcoin, 260-day volatility, same measure, annual has dropped to lowest ever versus Tesla. And it just looks like it's starting to bottom. Now this happened before. So look at the trend, dip in the trend going right back. So that's what I fully expect to happen. And also that's indicative of the big macroeconomic is Tesla is now in the S&P 500. It's a significant stock. And guess what? It's been declining on the year. It's down almost 20%. Yet Bitcoin's up almost 70%. I can expect that to continue. And it's a good way to look at it is if this continues, it's indicative of the equity market's just getting a little bit overdone, i.e. one automaker. Yes, it's very innovative, but having a larger market cap than every other automaker on the planet together, it's maybe a sign of a little bit too expensive. And then you look at this other asset, Bitcoin's well in its way becoming the global digital reserve asset in a world that's going digital. So I view this as just noise in the trend. Don't wanna see it sustain much below 40. And I fully expect it to get back above 60. And again, it's, you know, you need to have these little dips and that's what it's doing. So, and I like what Marcel said, just to cover back to their 50, means it's just set and it's just a bull market that's making it as hard as possible to hold on, which is a sign of a good bull market. Yeah, and it's actually interesting what you said before that the Bitcoin, that Bitcoin is being tested and it's proving its strength through these tests. So I wonder, we will see the results of this strengthening. So we will see a future where Bitcoin is not gonna be any more so vulnerable to Elon Musk's tweets. Oh yeah, well, that's where we're going. And Elon Musk is probably the most widely known persons on the planet and having been featured on Senate Live that might have marked peak Elon Musk. And maybe it's certainly marked peak Dogecoin as I look at it. So look at Dogecoin, that's great for traders. Bitcoin is for the world asset managers to allocate to and some of them will never sell. I don't think this changed that trend. I think that really kicked in this year and it's one thing that Scott and I have agreed on a lot is what really switched in the narrative before your greater risk was allocating to Bitcoin and your greater risk now seems to be not allocating to Bitcoin, I still think it's that key way this year. And then we saw that major dangling carrot that's got a little knocked on lately is US advent of US ETFs. That was pushed back a little bit. So Bitcoin has had some major blows. And guess what? It's still right about that same level I looked at as my initial resistance this year, 50,000. So I look at it is at some point there will be US ETFs in Bitcoin, the SEC coming down on Binance might be part of getting there. But to me, I can't really get bearish into space until we get past the dissemination of US ETFs. And I think like from our ETF team pointed out at Bloomberg intelligence is that yes, what happened recently is it may be delayed it might not be happening this year, but it's just gonna happen eventually because the SEC is looking irresponsible for not allowing ETFs in the US. I mean, they're available in most other countries now most notably Canada. Okay, and also there are not only bearish news today there were also other bullish news that have been counterbalancing the bears. So right after the crash micro strategy bought a dip and it bought 15 million worth of Bitcoin for an average price of 55,000 per Bitcoin. So that was another move from a super bullish micro strategy and then also Mark Cuban. Mark Cuban said that in response to Elon Musk's move said that his company will continue accepting Bitcoin because replacing gold as a store of value is good for the environment. I'm glad you mentioned we just hit you. There's a headline that just hit the tape on Bloomberg. Pantera has forecast that Bitcoin could rise to 15,000. Bitcoin could double the next five or six months. Morehead says this could be a buying opportunity for Bitcoin. Morehead says doesn't see energy drag an issue for the rest of the industry. Morehead Musk has a point on Bitcoin. There are other chains and last but not least Pantera's capital Dan Morehead comments on Bloomberg. So those that just hit the tape. Okay. Now I would like to switch to the other big piece of news of today, which is regarding Binance. So a recent Bloomberg article announced that Binance is under investigation from the IRS and Department of Justice regarding money laundering. So after that, the markets were again in free fall after Elon Musk's move, they were rebouncing. But then after this piece of news from Bloomberg, apparently it crashed again. So what is your take over this situation, Marcel? Have you been following these rumors around Binance? Well, rumors about Binance and clashing with the IRS and Department of Justice aren't exactly new. And BitMEX, which used to be the largest derivatives Bitcoin exchange is also facing problems with the IRS and money laundering case. And I think the CTO has been arrested for a week or so. And the owners had to pay like $10 million bills and they're still under investigation. But BitMEX is still up, it's still trading, it's still working. So what we need to have in mind is what is the relationship between Binance? Okay, it's a large exchange, I see. And Bitcoin, if Binance over the span of three months they're lose volume and they disappear just as BitMEX did on the derivatives from a 50% market share in one year to a 5% market share this year. It doesn't change anything on Bitcoin fundamentals. It doesn't change Binance, the global Binance doesn't even have fiat money in or out. They use gateway payments providers for that. So I don't think it's that relevant. I don't think that the IRS will shut down the exchange or money will be locked there for a year like we had Montgox like five years ago or whatever. I don't see this scenario developing. So if there's blood on the streets because of these news it's a bio opportunity for sure. Awesome, also I would like to take this opportunity to address our audience. I see that there are a lot of people watching. So if you have any questions regarding the latest moves in the market, Elon Musk's not accepting any more Bitcoin for buying Tesla cars and these recent rumors regarding Binance, please write them in the chat and I will ask them to our guests. So now I would like to know, I would like to know what Scott makes out of this latest Binance news. Ricky News, the United States wants you to pay your taxes. That's what I make of it. It's stupid, it means nothing. Of course they're gonna, they just did it to crack in. We've been down the same road with Coinbase a few years ago. Everybody freaking out that Coinbase is gonna share who actually bought and sold Bitcoin on their exchange. Can you imagine if E-Trade or TD Ameritrade or Schwab, somebody said, hey, we wanna see your records so we know what people made and that affected the market. Of course they want you to pay your taxes and they wanna know what Americans are doing with their money. I don't think that Binance is complicit in anything. In fact, there's not even an indication in this news that there's any charges, right? It's just IRS is looking at Binance and apparently that is something negative. Of course they are. They wanna make sure that we pay your taxes and if you pay your taxes, you have nothing to worry about and this literally has nothing to do with Bitcoin. Literally has nothing to do with Bitcoin. Okay, now I would like to know what Mike thinks about it because he works at Bloomberg. So I think there is no more qualified person here to discuss these latest Binance rumors. The market's gonna look back at this as a good thing. It's adding regulation to the space and there's one thing I'll encourage anybody who's ever made money on capital gains in their life is pay your fair share of taxes and be grateful you've had capital gains and grieve gratefully in the system you can do that. And that's from the son of a Marine, father of a Marine, ex-accountant and a son of an accountant. Just pay your damn taxes. And we all know there's the fairest things going on Binance and that's fine and it's just part of it entering into space. We all expected this. It just, to me it's like when everybody expected to get hammered by regulators back in 2019 and I remember I was surprised it took so long and guess what, that market a great bottom in the market. To me that's what's gonna happen here. And again, this is gonna take months, maybe even a year to work out. In the meantime, market's gonna move forward. We might have ETS by then. So I think most people are gonna look back at this and say thank you for the dip. Thank you for regulating it. Yes, and I'm sorry if you're young and don't understand what's like to have the IRS clean out your bank accounts and that's from someone who's working in the board of trade with 5,000 people in one space trading like this tick for tick. This space is in some ways it's big but compared to what I did in the futures with leverage while most of us 20 to one, you pay your taxes and come in this is gonna happen but it's also part of what happens in society. New and disruptive technologies try to bend the rules a little bit and you have to push back a little bit and then everybody wins again. I just hope we push back in a reasonable way and I fully expect it to happen. And Binance might just give the finger to SEC which wouldn't be good because you don't mess with the IRS. Anybody in the planet does it this year it's not a good thing. So I think it's gonna work out the best regulators work out the best for this space and it helps bring in the institutions. They know if like things like Dogecoin is really scared the institutions away like this is not something I want to explain to my board of directors and they don't wanna explain to the board of directors how things might be bad actors in this space trading Bitcoin in different parts of the world and using it for things like ransomware. So this is good. Just takes a little time to work it out. Look forward, look at it from a year from now. I think we'll look back at this just like we did when the New York Attorney General first cracked down in Tether. Guess what? That's when Bitcoin was around 5,000 in April, 2019. It's a key thing that flipped me bullish and here I see it. It's about 10x that price now. Mm-hmm. Yeah, it's funny. I remember that you Mike are not a big fan of Dogecoin in a previous interview with us. You also expressed your skepticism towards this coin and the effect that it has on the reputation of the whole space. But I would like now to take the opportunity to ask some questions from the audience. So one of our viewers is asking do you think Ethereum will drop anymore since Bitcoin is dropping? Let's, Marcel, what's your take on this? Will Ethereum drop more since Bitcoin is dropping or what's your view on Ethereum right now? Oh, Giovanni, there's been a lot of discussion about Ethereum decoupling from Bitcoin because over the past, I don't know, three or four months, Ethereum had been on a wild price increase. I think 90% increase in 30 days, something unseen and unimaginable, mostly because of the decentralized finance, the DeFi industry, which is growing at a steady pace. But the main issue for Ethereum to continue climbing is Ethereum because the network fees climbed to $100 at big times, maybe $200. So it becomes unusable for the majority of the people and competitive competitor networks such as Binance Smart Chain are getting flow from this pancake swap, which is basically the Uniswap on Binance Smart Chain is now the largest decentralized exchange with, I don't know, $10 billion total value locked. So Ethereum competitors are starting to eat some of this industry. So I think that this decoupling happened exclusively because of the DeFi industry. And at some time, I don't know if when Ethereum reaches $5,000, $6,000, it's gonna stop because people would think, well, Bitcoin has been here for 12 years, has sustained major attacks like the Bitcoin Cash fork in 2017 and it's still going up, it's still strong. The developers are preparing the lighting network scaling solution for cheap transactions and it's valid at, I don't know, $1 trillion, $900 billion. And if Ethereum goes to $5,000 to $6,000, the spread is gonna be tight for both and people are gonna start thinking, well, if Ethereum had to be a trillion-dollar business, then by this time, we would have seen large companies put Ethereum and the balance sheet and this is not happening because Ethereum is kind of some semi-centralized network in terms of development. So I don't think it can go up forever and I think this decoupling happened because of DeFi industry boom. So I don't think it's gonna last forever. Okay, and Scott, regarding Ethereum, I saw one of your tweets today where he was saying that Ethereum doesn't care about Tesla or something like that. What did you mean by that? Well, I think that Ethereum has been dominating on the Bitcoin pair. And so if you're a trader in this market that's looking to stack Sats, then Ethereum has been, I think disproportionately high upside for doing that. If you're looking at it now, obviously it's dropped proportionately to Bitcoin. So it hasn't lost value against Bitcoin necessarily, although I haven't checked it in the last hour or so, but obviously it's losing against the dollar. I think it's prudent to have exposure to both Bitcoin and Ethereum for very different reasons. And so, but listen, when the market drops, Ethereum was the thing that was pushing the highest. So there's obviously the chance that the thing that's doing the best has the furthest to fall. So I think Mike has alluded to the fact that he could see $3,000 Ethereum or a bigger drop from here before that potentially heats back up again. But Ethereum's done exceptionally well. And when something does exceptionally well, you expect some retracement before continuing that bull run. So I don't think that Ethereum has by any stretch entered a bear market or anything like that for people with that narrative. I just think that now everything's cooling off. Okay. Do you think that Ethereum can rise above $6,000? And if you think so, what needs to happen for this? I think Ethereum can go much, much higher than $6,000, but it just depends on your timeframe and level of patience. I do think that it will go much higher with time. I just think that that's gonna require some push towards Ethereum 2.0, some solutions to deal with gas fees. But as you alluded to, I mean, DeFi is growing at such an exceptional pace and still most of that is being built on Ethereum. I view Ethereum as the internet of value, a way to transfer value without third parties and middlemen. For now that's still where the core innovation is happening. So I don't see why Ethereum fundamentally can't continue to rise if of course the technical problems don't get in the way. Awesome. And I think we can continue talking about Ethereum in a second because we have another guest joining our conversation soon. But first, I would like to take the opportunity to announce new coin telegraph documentary that is going to be released very soon. And today we're gonna show the trailer. So it's an upcoming documentary on the history of cryptography. When we return, we'll be talking about the environmental impact of Bitcoin's energy consumption with Joseph Pallant. Public safety and personal privacy. Both are fundamental aspects of the society we want to live in. Should tech companies be held responsible if their encryption tools are used for malevolent purposes? What if people's lives are put at risk because of impenetrable encryption? If indeed, as a result of Apple's encryption of a device, someone dies. Are you willing to accept liability for that death? Senator, as a software engineer, my focus is on trying to provide the strongest security for all of our users and protect them in all cases. It was suspicious people who thought something like that could be happening, but it was actually much worse than the average person expected. My name is Whitfield Ify. People want to talk to me these days because of some work that I did 47 years ago in the spring of 1975. I saw this as a way to advance liberty. So that was our trailer of our upcoming document. Think about this topic. So let's get into it. I would like to know first how, I mean, as we already discussed, Elon Musk said that he's concerned about Bitcoin's environmental impact. And in particular, he said that the carbon footprint of Bitcoin is increasing and that he doesn't like the trend. And he said that he will resume Bitcoin transactions. Once Bitcoin mining will become more, will become less energy consuming or at least it will be using more renewable energies. So what do you think about this whole thing? Are Elon Musk's concerns kind of justified? Well, in the discussion of this case, people have been trying to figure out why now, what's bringing this up right now because he's an intelligent guy. He has really led Tesla, which is the major pioneer or leader in renewable or in electric cars. And so he clearly has an environmental understanding of things. And so for whatever reason, and people have lots of theories right now, it is coming up as the stated reason for them to no longer take Bitcoin. And I think what this is really, just really clarifies for me, whatever the reason, whatever the underlying dynamic at play, I believe that it means that the crypto industry and primarily proof of work coins, but I think the crypto industry, if it can no longer ignore the issue, it can no longer hand wave the issue away because we're seeing right now, it's a reputational risk for business. So I think that that's likely somewhere in the specter of why this is an issue for Tesla and Elon right now, is that there's reputational risk to Tesla that they cannot field, they cannot stomach. And so they have to step away partially. I also see this in my discussions in the space where other organizations, public companies, innovators, entrepreneurs are really excited about blockchain. They're excited about Bitcoin or they're excited about Ethereum or non-fungible tokens. And they're having to not move ahead with their plans. They're having to not pick up this revolutionary technology that we're all such a fan of because of this reputational risk, deserved or not. So it clarifies to me that we need to lean in, address the problem, and we can't wave it away. And you know what? To me, that's really exciting. As the founder of Blockchain for Climate, we're working on a fascinating tool that uses non-fungible tokens to enable operationalization of the Paris Agreement on Ethereum. So we believe deeply in the toolkit. It's great to be part of a discussion around how to solve it. And I think this is a great opportunity for everyone in the crypto space to lean in on this defining issue of our time. Yeah, and I guess that the data shows, it's about knowing the data. And it seems that the data shows that Bitcoin is currently consuming as much energy as a small country, which of course in the big scheme of things is a very, very little percentage of the global energy consumption. But still, Joseph, what would you say if I ask you that the fossil, the Bitcoin is increasingly using fossil fuels for mining and transactions? Is it, this is what Elon Musk said, that the fossil fuels usage is increasing. Is that a correct statement? According to your data? Right, well, I am not the expert on this. And I know we hear of sort of repurposing, dying gas plants that we're gonna go offline and repurposing that for Bitcoin. We also hear about all the really neat renewable energy that's getting put online. There's this question of, is the Tesla move because they're gonna have a neat play with solar plus powerwall plus miners. And one of the thing that really trickles down for me as a carbon market professional, I've been developing carbon offset projects and doing carbon footprint analysis for the last 16 years. And for us, we just really need to clarify the attribution of the dirtiness maybe, but I think from a solutions point of view, the attribution of the cleanliness of the Bitcoin mining to the actual Bitcoins. And I'm still early in my learning around how do we actually tie that clarity of low carbon impact to the Bitcoin? But I think this is key because otherwise we're all just shouting into the void and saying, no, it's clean, no, it's dirty. We have refining metrics around, the energy usage of the Bitcoin network. And we have an ability to understand injection of clean energy into the grid. And we have mining pools using all renewable energy, for example. So I think that tying of climate impact to the underlying Bitcoin asset is extremely important. And I see that happening from mining pools being in discussion about this. And I'm really excited about advances in, how can a mining pool have a clean pool where the miners are sharing their data being transparent about their energy use? Maybe they pair that with carbon offsetting if it's not a full renewable energy pool. And then attaching that by mining pool, we have ETFs looking to offset their footprint. So 9-point, a Bitcoin ETF in Canada is working with Carbon X, who disclosure I'm an advisor to, to offset their whole ETF. And so, and finally, being an Ethereum fan, the ability to wrap Bitcoin tokens along with either provenance of the renewable energy as well as offsets like some sort of green Bitcoin is also interesting to me. So I think that one of our ways through this process and a way that is generative in allowing people to do more clean energy mining incur any extra cost necessary is packaging the Bitcoin with the benefit. Okay, so there is a lot of stuff to unpack here, but of course we don't have the time to dive too much into this very complex topic. It's a topic for another discussion, but with you, Joseph, we had a very interesting debate not long ago. So I invite everyone who is interested in this topic to check it. It's in our YouTube channel. But I would like to know now if we still have our guests on, because I read a tweet by Scott Melker not long ago who was saying that the situation is improving and that regarding the Bitcoin's energy consumption that is improving. So it's never been so good. So what did you mean by that, Scott? Yeah, I think anyone who's dug into the metrics and the data and Joseph's obviously far more equipped to speak to this knows that the trend is moving in the right direction, right? I mean, it started with primarily coal probably China. I mean, I spoke with Peter Wall of Argo on my podcast. They're moving basically completely renewable. They're building a factory in Texas and Mike already alluded to it as well. A lot of it is wasted energy that's being reused. So the amount of electricity is somewhat irrelevant. It's where it's coming from that matters. And if it's wasted energy that's being recycled and reused, then it's sort of a false flag to talk about the sheer number of how much it is without talking about where it comes from. And so I think that there's a very, very massive move towards awareness of this problem and that there's gonna be pressure on miners to solve it. Right, so basically you're saying that Elon Musk is misinformed because he wrote that according to him the carbon emissions are increasing and that doesn't seem like the version of the situation that you just described. I mean, I can't argue directly with Elon Musk in the data that he's seeing or the data that I'm seeing. I don't know if he's misinformed but he had that data before he decided to allow Tesla to purchase Bitcoin. I mean, to people to purchase Tesla cars with Bitcoin nothing has changed. And so that to me is why it's strange is because it's not like there was some new study or data that hit the market that made this decision seem so pressing for him. I think that it's a problem. I think that energy consumption is a problem to whatever degree it is for each industry but that everything as Mike has said over and over again is moving in the right direction and that's certainly the case for Bitcoin. There's a lot of momentum in the right direction. Okay, and now I would like to bring into the discussion the topic of Ethereum again because as we know Ethereum is turning into a proof of stake protocol from a proof of work to proof of stake, which is far less energy consuming. And basically a lot of people are wondering will Elon Musk turn to Ethereum eventually since he said that he's looking for these less energy consuming solutions. What's your take on this possible scenario, Marcel? First of all, I don't think that this transaction Ethereum 2.0 will happen over the next six to nine months. I think that's gonna be something for 2020 show. Other than that, looking for solutions to improve the energy efficiency or to stop using coal for Bitcoin mining, it's great. It's gonna be awesome if Elon Musk's help us out in this situation. But I don't think Ethereum as it is right now it's an alternative solution for this problem. So I don't think it works right now. So you don't believe that this news is particularly bullish for Ethereum? No, Ethereum needs to deliver the EIP 1559 first. There's a lot of updates that need to be made before Ethereum 2.0 plus every smart contract and application that clearly runs on a network Ethereum 1.0 needs to shift to the other network and that's gonna need some updates and change not something that's happened overnight. So I don't think it's a viable solution for the next, I don't know, 12 months. What about you, Mike? What do you think about the possibility that other cryptos that are less energy consuming will gain popularity and maybe will attract some institutional investment because of this decision that Elon Musk made? I think it definitely improved the possibility. One key thing to point about Ethereum is, remember there's been a lot of people most notably, Rahul Paul, pointing out that Ethereum looks like Bitcoin did in 2017. It started around 1,000 and ended around 15,000. If that's the case, I've recently published on today, Ethereum's way too expensive here. It got way too expensive nearing 5,000. It could easily get to 2,000. It's still on the same pace as 2017 Bitcoin that was. Also, I like to compare Ethereum versus the broader market. I just compared it recently to the MBIS Crypto Compare Index, which is from VanEck and it's near the peak from 2017. So Ethereum's great. It just got way over its skis and today's a good example. It's down more than Bitcoin. 0.5%, Bitcoin's down 12% based on Bitcoin Bloomberg fixed settlements which takes the dissemination of all exchanges. So it just pointed out market got way over its skis. Definitely Ethereum, it was up 400% in a year and darn, I guess it's not up as much anymore. But also looking forward, it's not like Bitcoin, the global digital reserve asset and as Marcel pointed out and Scott pointed out, it's just more representative of the space, smart contracts and decentralized finance and tokenization. The most widely traded crypto on the planet, Tether is an Ethereum token. So I'm not bearish in the space, but I just think the market's well into the, needed a decent correction. And when I look at people looking to buy, they're asking to buy dips in the market and I say, well, there's different reasons, but always think about diversification. Don't just buy one and Bitcoin's your digital reserve asset, Ethereum represents the space. And I just like to point out from a use of energy standpoint, just remember anything, the whole space, the use of energy is part of the strength of the network and every advancement in my humanity is converted energy into something that's worthwhile. And that's what digitalization of assets are doing. That's what Tesla does with electrification in vehicles. And it's just all going that way. And this is just part of that discombobulation in those trends and people just trying to understand it. It's happened in every major advancement in history. I mean, a lot of times when electricity was first becoming disseminated, I thought they'd be electrocuted. And when the trains first started to get in use, people thought, oh man, if I go faster than a speed of horse, it's gonna mess up my metabolism. And there's so many examples of that in history. So with that, I pass it back to you. Yeah, of course, this is a good point, Mike, when you say that anything that is useful also comes, I mean, a lot of stuff that are useful consume energy and it all depends on how worthy are these things that consume energy. So people say that Bitcoin could eventually become this replacement for the traditional financial system that consume a lot of energy. So that at the end of the day, Bitcoin will be very good for the environment. Other people who don't believe in this vision and think that Bitcoin is a big kind of energy consumption is not justified. But I would like to know if any of you could imagine the transition of Bitcoin from a proof of work to another kind of another system like proof of stake, for example, is it, I guess this is something very unpopular and maybe a lot of people don't like this idea but what's your take? Is any of you, does any of you think that this is something possible? No. No. Marcel? Well, as I said before, Bitcoin is a protocol. It's a software that people run on their computers and nodes and whatever. So if there's a solution that comes out over next one or two years that provides the same decentralization and the same security, people will upgrade. Nobody's chatting on groups. Well, let's spend energy, let's be resource wasteful. No, it doesn't work that way. Bitcoin will always find a better solution and people will upgrade their nodes and the software. If the security is there, if the decentralization is there, but I don't think it's gonna hype over the next three years and Elon Musk is gonna crawl back and say, well, okay, guys, you win. Okay, I guess that remarks is very good to wrap things up. Maybe you would like to give your last comments. Joseph, do you have anything to add on this topic? Yeah, I think on the Ethereum topic, Ethereum tokens are not gonna become, Elon's not gonna switch to that for payment. I do think that the opportunity to use the smart contract ecosystem and the amazing builders and community in Ethereum on Tesla's behalf is interesting and exciting to me. As a really big fan of Ethereum, a believer that ETH 2.0 is coming soon, I will say that this is a really neat moment where even though Bitcoin is taking the heat, I think that the Ethereum community, I guess it feels it in the price, but I think it's an opportunity to realize we can't be sanguine and just lean back and say, oh, we're gonna solve all our issues with ETH 2.0 because A, if we'd solved it sooner, Elon could just switch to Ethereum and away we go. But moreover, I think it's leaving a lot on the field. And so once again, I'll say lean in, the people who are programming on Ethereum, the community, the creations that are getting made in DeFi are mind-blowing and I'm really passionate about trying to encourage people in this ecosystem to not just play defense and get us up to carbon neutral, but try to really keep running from there, figure out how the Ethereum community and hopefully all of the crypto community, Bitcoin has this opportunity now to lean in and help you climate change. Thanks, Joseph. One last word from you, Scott. Yeah, if we're talking specifically about proof of work, I think that that's the calling card for Bitcoin security. That's what makes Bitcoin Bitcoin and everything else, everything else. So it's not even worth discussing. It's never gonna happen. Mike? Yeah, I like to echo what Joseph said. It's definitely mind-blowing what's happened in the space. Ethereum's leading that. And what Scott said, you know, Bitcoin's what it is because what it is, it's one that adoption race and it's gonna stay that way. And it's just that source of all that power is, we all know it's all going renewable and it's transitioning rapidly. And it's just a matter of time that electricity is gonna be so darn cheap in terms of renewable sources from most notably solar. And I can say as an example, I installed solar in my house eight years ago, paid for, it works great. And that was way antiquated technology. So to me, looking forward, what's looked forward, what we've seen now is I think is noise, a blip in the trend. And I think it's just the market's gonna, we're gonna see responsive buyers come into space and just resume the bull market in Bitcoin. And crypto. All right. And Marcel, would you like to close our discussion with a thought on this last topic? Sure. I'll send a message to Elon Musk himself. So if he thinks that has a better solution or if Dodgecoin is as the security or this decentralization is the same as Bitcoin, then put a billion dollars on the balance sheet. Just put two billion dollars on the balance sheet and sell Bitcoin. We'll buy it everything. Even if we have to pay $40,000, $35,000, we'll buy it. There's no hard money, hard assets in the world. And the world became inflationary. So Bitcoin is gonna soar to $200,000, $500,000. It's not gonna stop because some old guy is complaining. Let's hope that Elon Musk doesn't follow your suggestion. But yeah, it was great to have you guys. It was an incredible discussion. Thank you. Thanks, everyone. Thanks to our audience also to watch us. It was also a great participation. I'm Giovanni, your host. See you next time.