Today two execs from Sam bankman Freed's Crypto companies plead guilty SPF Himself is now back to the U.S and macro Investment strategist Lynn Alton Discusses her outlook for crypto prices In the new year [Music] Welcome to cnbc's crypto world I'm Tanaya McKeel crypto prices are mixed Today Bitcoin dropped once again staying Below the seventeen thousand dollar Level ether dropped to around eleven Hundred dollars and cardano Rose to 25 Cents Okay let's talk about the top stories First Federal prosecutors announced that Two of Sam Beekman Freed's former Associates pleaded guilty to defrauding Investors and are now cooperating with The government Manhattan U.S attorney Damian Williams made the announcement Last night the southern district of New York has filed charges against Caroline Ellison the former CEO of Alameda Research and Gary Wong a co-founder of FTX in connection with their roles in The frauds that contributed to fdx's Collapse Both Miss Ellison and Mr Wong have pled Guilty to those charges and they are Both cooperating with the southern District of New York in the video Williams reiterated his call for others Involved in the alleged fraud to come
Forward as the investigation continues The SEC and cftc also announced charges Against Allison and Wong for their Alleged roles in the multi-year scheme To defraud investors a cftc statement Said the two accepted the claims made Against them the SEC said that Wong and Ellison had also accepted quote Bifurcated settlements in connection With the complaints and are cooperating A lawyer for Wong told us quote Gary has Accepted responsibility for his actions And takes seriously his obligations as a Cooperating Witness Allison's attorney did not immediately Respond to our request for comment next Up the charges against Allison and Wong Were announced the same night SPF was on His way from the Bahamas to New York Where he faces eight Federal criminal Charges Williams also announced last Night that SBF is now an FBI custody and Will appear before a judge in the Southern district of New York as soon as Possible SPF has 48 hours from when he Landed last night to appear in court for His initial hearing as of noon Eastern That has not happened last week Federal Prosecutors charged SBF with stealing Billions of dollars in fgx customer Assets to plug losses at the crypto Exchange's sister hedge fund Alameda Research Williams described the Situation as quote one of the biggest
Financial frauds in American history the Former crypto billionaire has publicly Acknowledged risk management failures at The exchange he founded but he said he Does not believe he has criminal Liability Nick Ackerman a former Assistant U.S attorney for the southern District of New York spoke with cnbc's Squawk on the street this morning and Said the cooperating Witnesses are quote Extremely important for the case this Was a very fast move by the government No question about it they really moved Quickly to get the two top insiders to Basically cooperate is a huge huge coup For the government and I think it's just Going to make the whole house of cards Fall pretty quickly other people are Going to realize that to avoid a really Long jail sentence they're going to have To cooperate and give up other people And finally as ftx's collapse has Rippled across the industry the SEC is Increasing the scrutiny of the work Audit firms do for crypto companies That's according to the Wall Street Journal which cited a senior SEC Official in the interview with the Journal The Regulators acting Chief Accountant warned investors to be quote Very wary of some of the claims that are Being made by crypto companies we've Reached out to the SEC for comment but As of noon Eastern we hadn't heard back
Ftx's implosion has impacted liquidity At companies with exposure to FTX and Led to investigations by Regulators Around the world Okay for our main story we turn back to Crypto markets I spoke with macro Investment strategist Lynn Alden about Her long-term bullish outlook for crypto And how the fed's actions could impact Markets in the coming months take a Listen So when you are bullish on bitcoin and Your work focuses heavily on the macro Environment which of course was very Challenging in 2022 so from where you Sit what has this year been like for you So for the most part we're watching Essentially the the reverse of what we Saw over 2020 2021 so we had excess Liquidity put into markets mostly on a Worldwide basis and now because of the Inflation issues that were caused by That as well as you know various Physical constraints and problems like That we're seeing a rapid withdrawal of That liquidity and so essentially what We're seeing is central banks are doing Their best to try to slow down demand to Try to take the edge off of some of the Inflation pressures we see and that's Set to continue to probably at least Early 2023 and so obviously that's a Very negative environment for most risk Assets especially things that um have
Duration risk associated with them so Long duration bonds uh you know Unprofitable growth equities things like That whereas uh you know value equities And other types of assets have generally Been more resilient given the events of This year would you say now you know the End of the year is upon us you more are Less bullish on bitcoin than you were at The start or is it kind of the same Well so at these beaten down levels I'm Quite bullish and so the way I've been Tracking it is that normally Bitcoin Does very well in improving uh liquidity Environments as well as just general Risk-on environments so for example if Look at the macro like the purchasing Managers index for example it's one of The best proxies we have for economic Acceleration or deceleration most of Bitcoin's bull runs have been associated With that Rising PMI environment that Rising liquidity environment and most of The bear markets have been associated With with the you know the drawdown in Those things and this one's been no Different and so you know for the second Half of 2021 and then most 2022 I've Been kind of having two different Minds About Bitcoin which essentially that I'm Structurally bullish the thesis is Unchanged but then in a cyclical sense Uh people have to be concerned and you Know some of these contagions I think
Were worse than than even I expected Even though I was concerned about some Of them so for example I didn't Necessarily expect we'd see you know Bitcoin back you know below 20 000 for Example even though I expected kind of a Choppy Seas ahead but now that we are Back down to these beaten down levels We've had a number of blow-ups in the in The crypto space more broadly I'm Actually pretty bullish on it here with Say a three year view uh but you know The caveat is that I I'm still very Uncertain around the next quarter next Two quarters because we still have Declining PMI environment we still have Kind of these these General risk-off Conditions we still have the FED trying To type monetary policy both with rates And with their balance sheet and I don't Think that's going to extend much past Beyond the first half of next year so I Still think we have this window where we Have to be kind of concerned but I think That there is this is a really good Accumulation point with say something That has like a three-year view on the On the asset the underlying fundamentals What should investors be looking at and Focusing on whether that's a narrative Or a theme or a data point or a price Level when you filter out all of the Noise what are you Lynn left looking at um and what should
Investors be looking at so as as I Previously previously mentioned one of The things I look at is the PMI so the Purchasing managers index is the economy Accelerating or or uh you know Accelerating or deceleration another one I look at for Bitcoin specifically so a Lot of people talk about it as like an Inflation hedge whereas if you look at The data it actually the one of the best Proxies for it is that it's a a currency To basement hedge or a money supply Inflation hedge which is essentially That if you look at say Global M2 Global Broad money and then you denominate it In dollars right because that's the Global unit of account for most uh Purposes so if even if you just look at Say the top five jurisdictions so for Example look at United States you look At China uh you look at Japan you look At the Euro area uh you can add the UK You look at a number of these large uh You know uh broad money supplies you put Them together and then denominate that In dollars generally when that's Rising That's pretty good for Bitcoin basically If the growth rate is rising so so Basically more Broad of money is being Created in dollar terms which is either Because they're all rapidly expanding Their money supply or because the dollar Is weakening compared to some of them That's generally a very good environment
For Bitcoin normally Bitcoins bull Markets occurred during that period when You have a pullback in that or a Stagnation in that uh level especially In rate of change terms normally that's Pretty bad for Bitcoin and that's Actually what we saw throughout 2022 I Think one thing we look forward to in 2023 is that probably the the rate of Change is going to resume again uh with You know higher money supply growth Especially in the second half of the Year I I'd used to I do think there's Still risk in the first half of the year Um as you still see kind of this this You know this overall tightening pattern And you know if we characterize 2022 It's mostly a story about valuations so For example corporate earnings have not Collapsed uh unemployment is not spiked Up yet we see early signs of softening In some of these metrics but there's Been no rapid change and so most of the Carnage we saw on assets is just that Their valuations are going down so bond Yields went up earnings multiple sales Revenues of different companies went Down and that pushed a lot of valuations Down across the board including for Things like Bitcoin whereas we look out In 2023 I think it's going to be Probably a different story which is that I think earnings are more of the concern For for the broader asset space but I
Think that the that the overall kind of Um hardness of the dollar and the Reduction valuations of some of these is Not going to be the big story and I Think that gives assets like say gold or Bitcoin a chance to potentially do Better than what we see in in the broad Equity space because it's I think the The weakness is probably more earnings Related what are the main trends that You're following in crypto for 2023 on The on the development and use cases Side So one thing I'm watching a lot is the Development of the lightning network uh Which is this the layer on top of Bitcoin but based on channels and fast Smaller payments Um that really took off over the past Couple years from a small base it's had Basically a pretty rapid growth rate Just from a very small level and it's Become more and more usable over time Basically you you have a higher rate of Having larger payments go through Smoothly and I think that you know we're Seeing a lot of development still on the Back end of that Network basically you Know improving the infrastructure Finding all the optimizations for Different trade-offs between you know Custody versus reliability and I think That's that's something that's being Built a lot during this bear Market
That's going to be interesting and it's Actually you know the growth rate of the Lightning network still held up pretty Well considering the bear Market that We're seeing and so I think that's Something to watch Okay that's all for crypto world today But we'll be back again tomorrow so We'll see you then
