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November 18, 2020

Crypto RFQ

Discussing Bitcoin, DeFi and Central Bank Digital Currencies With Crypto Finance


Patrick Heusser, head of trading at Crypto Finance, joined Coinscrum Markets producer Paul Gordon to discuss the bitcoin market, DeFi and central bank digital currencies (CBDCs). Heusser described a “very bullish tone” in the bitcoin market over the past several months, pointing to a “nice breakout out of the clouds” that was accompanied with good volume.

(0:58) “It all looks like a proper bull market,” he said.

Gordon asked about the critical levels on the downside that people need to watch for, in response to which Heusser said he sees a wide range of $14,000 to $16,000 for the consolidation currently. The BTC price could actually go toward $11,200, but he doesn’t believe the market is going to dip down to that level anymore.

Meanwhile, decentralized finance, or DeFi, has suffered after its big run-up over the summer. There was a big pullback though the DeFi space has recovered slightly. Crypto Finance’s Heusser said,

Asia Takes the Lead on CBDCs

On central bank digital currencies (CBDCs), Heusser noted that Asia is marching ahead, especially China. Smaller countries are also quite advanced with their solutions, including Cambodia, which went live with its version of a CBDC and already has commercial banks attached to it. Thailand and Hong Kong, meanwhile, have established a payment gateway between the two jurisdictions. And of course, China, whose e-yuan CBDC is very advanced and already working in some provinces.

Europe, he said, is a much different story with so many countries and so many different opinions among politicians. Europe remains in the “project phase” with plans to come together in June 2021 to discuss the different opinions.

(4:10) “I’m not quite sure how quick Europe will get to a proper CBDC project,” said Heusser.

The UK, he added, is in a different situation because now they only need to look out for themselves, though they still must make sure that they stay connected to their trading partners. Heusser believes that CBDCs will be the key that every country needs to be able to settle their goods and their money.

CBDCs have also given stablecoins a positive spin because while governments are moving slowly on digital currencies, stablecoins are already here and working. Stablecoins have several billions already parked and moving around the globe. He predicts that corporates will soon look to stablecoins to move funds around intra-company wise across the globe, saying it’s going to be a cheap and fast solution for them and as soon as they have the infrastructure in place, this will be a solution they will use.

Sell-Side Liquidity Crisis

Another big story over the past few months that has given bitcoin an uplift has been the wave of high-profile investors entering the market as well as corporate treasury being allocated to bitcoin, the biggest one of which was MicroStrategy followed by Square. Heusser noted how they’ve been constantly buying, saying “they’re not buying big clips but they buy constantly and that’s exactly what we have seen in the market.” (10:45)

Gordon pointed to a theme where a lot of bitcoins are being withdrawn from exchanges and moved to cold storage, saying it could have liquidity implications going forward. Crypto Finance’s  Heusser agreed, saying that the bitcoin balances on exchanges are rapidly decreasing, adding:

(8:03) “Usually I talk about it and I label it as a sell-side liquidity crisis…I think we’re in the middle of it, actually. And if I’m not seeing onchain movements of a large amount of coins going back to exchanges, I just believe that the price can only go up because there is just nothing that can stop the buying pressure we see at the moment.”

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Gerelyn Terzo
Gerelyn caught wind of bitcoin in mid-2017 and after learning about the peer-to-peer nature of Satoshi's creation has never looked back. Previously she covered institutional investing and fintech for several major trade publications. Gerelyn resides in Verona, N.J.

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