sonali: live from bloomberg's world headquarters in new york, i'm sonali basak. tim: and i'm tim stenovec and welcome to "bloomberg crypto." sonali: bitcoin taking a summer slump, outflows from digital assets are hitting the crypto market. tim: we talk about volatility and the road ahead with meltem at coin shares. sonali: startups are seeing a slowdown. edith from raise capital joins

us to talk about the opportunities inside of and outside of the united states. tim: first, a snapshot of the market, read all around. bitcoin with a one-month low. prospect of higher rates for longer leading to pain in the wider crypto market over the last seven days. all coming at a time when we are seeing new record highs when it comes to equity markets. the s&p 500 hit its 30th record just yesterday area in stocks and bonds have delivered better returns than bitcoins in the second order of the year. quite a turnaround from the first quarter, when digital assets outperformed traditional markets by a significant degree. it's not just bitcoin going lower. we had solana, tether, all moving lower today. solana, down 6%. tether, just going into the red, moving from green to red just

now. does going, down -- dogecoin, down 8.2%. sonali: as you mentioned, bitcoin has had quite a slump. hit a level last seen since midway. the higher for longer messaging from the fed poses a challenge for speculation like an crypto and you can see that so much of that of came from earlier this year when the advent of the bitcoin etf hit the market and you have lost a lot of that steam with the last three of the four weeks seeing outflows. sonali: speaking about -- tim: speaking of outflows losing steam, that's what we've seen with 600 million dollars pulled from digital asset products last week. this is the most going back to march. this data is from coin shares international. again, this is all about rates. treaters have sealed expectations to cut rates, posing challenges for speculative investments.

sonali: we are going to bring in the coin shares advisor here, we have been talking about that sour grapes feeling. earlier this year when a lot of people started buying into the market with etf, there was a big question about whether this was the top. whether if you bought in now you would see gains in the long term. how do you answer that? meltem: these are all great questions. i'm calling it sideways summer. we had the winter of despair and an incredible two quite are -- quarters with record flows into etf. what we have now is exactly what we saw in march. hawkish fomc, expectations of rate cuts priced in. volatility is low. trading volumes, 22 billion last week. this week we are looking at

around 11 billion in trading volume. volatility is down, trading volume is down. there's a lot of uncertainty and the russian that we always look at is where are the flows coming from. the question of the summer is going to be -- what is the story around flow, who are the net buyers, where are they coming from, and more importantly what are they buying? it's the tale of two cities in crypto. sonali: what do you know about those buyers? where are they coming from, who are they? meltem: great questions. historically the great thing about crypto trading data is that it happens on the ledger and we can see where activity is happening. etf's have given us a lot of that data, settlements are happening on chain. authorized purchase etf's are maybe dividing volume between

wallets. so, it's more challenging to get the data. we get it after the fact. we did get filings from hedge funds and i was personally shocked that there were not more large fund buying. we saw a few larger institutions participating, but by and large is still driven by retail with a lot of comfort patient from people holding assets that are not chained to a coinbase, rotating to a product in brokerage accounts. the second thing that we are seeing is a lot of rotation out of grayscale products. sonali: sideways summer, but how can you be sure the next forward is not significantly downward? meltem: no guarantees in crypto. if there is anything i learned, i'm always surprised by this industry. bitcoin is still up for the year, the theory him and despite its slow start we are seeing it with the news here appending etf

and flowed material. from here i think the big question is that more assets flowing into etf versus coin exchanges, the big question is how is it owing to perform versus the higher risks for longer tail crypto assets? historically, bitcoin goes first and then showing brokerage accounts on crypto exchange's where there is accents -- access to the adoption, that effect has been greatly minimized and we have seen it across the board with underperformance. sonali: meltem, how do you think through the prospects for area moving forward? a lot of prospects around what etf would do being drawn into it, but the theory him is not nearly as bitcoin over the last couple of years. what you think about that moving

forward? meltem: it's interesting, more institutional alligators, you know, bitcoin has been around for 15 years. widely discussed, widely mocked, now accepted as an asset. some of the most luminary people in the traditional world of finance are in forcing its role in an investment portfolio. but we haven't really seen these massive institutional flows materializing yet. if we look at 13f filings and the exposure on the institutional side that was filed at the end of q1, i think that with either the story is even more challenging. awareness of the supply and demand challenges of theory him -- etherium. i think that crypto has earned its place in and in vestment portfolio.

as more and more banks start to calm -- cover etherium alongside bitcoin, perhaps we will see it materialized. but price drags in narrative. -- it drives the narrative. that's always the story in crypto. for material interest, we will need to see some relative outperformance compared to bitcoin and we just haven't seen that yet. etherium has really struggled to rally against bitcoin. sonali: speaking of stories, -- tim: speaking of chapters, i'm curious about what is next in your story. [laughter] previously you were a chief strategy officer at coin shares. what is your next move in the space? meltem: great question. there are a lot of things i'm interested in working on, but i'm going to continue to remain and i will share that message with all of your viewers. sonali: that is what we like to

hear. that was meltem demirors and if you have interesting crypto, we will keep an eye on everything she does. coming coming up, edith young discusses the state of crypto venture capital. sonali: in the price of gold has been hitting records all year. sonali: to access all the latest news and data, check out ripped out on the terminal. -- crytgo on the terminal. this is bloomberg. ♪

>> in many ways, they always say that the place to understand bitcoin the least is the united

states and may be a good place to understand it the best is argentina, but there are many places in the world where you get a different perspective on how value flows from person-to-person. certainly across europe there are so many great developments being worked on with this problem. tim: that was ian rogers after his firm opened a headquarters in paris last week. australia is due to list its first etf on thursday, debuting on the a sx exchange. others vying for bitcoin etf are beta shares and digital x. team australia listed a round of bitcoin influenced two years ago. sonali: we will discuss the best places to raise crypto with diff young, whose firms portfolio has quite a few. there are a lot of things going on in those assets right now. anything about the way that the

ecosystem is moving forward, people in the mainstream world look at bitcoin and etf's -- people look at etherium and bitcoin as etf's, but outside of them, what's the next big play? edith: first off, so interesting to hear meltam talk about institutional point of view. but where i'm from in silicon valley, we are playing -- paying close attention to all the coins in the world. the big thing is that crypto vc is back. 2.9 billion, investing to over 600 companies. about 29% increase quarter over quarter, which is a great sign. at the same time, i think mood is a bit different than before. i was just chatting with a hedge fund friend in asia, who was

telling me that institutional investors, yes, are excited about theory him but they do pay close attention to all coin. a lot more savvy this time. the key thing is, sometimes what institutional investors don't like to see is when a vc, us, invest too much money in the hundreds and millions of dollars when all of these tokens are late invested and unlocked, not necessarily good for the all coin. compared to the last cycle, in which i continue to be bullish and a play close attention to the token, those are like the two sort of from the last cycle that are now strong and standing . it would be very interesting to see this cycle, when more and more to vc is coming back to the market. are they being thoughtful about their schedule? are they really thinking through the true use case in the venture

space? one of my companies is so interested in seeing with stablecoin to sort of help with cross-border payments. we are talking billions in transactions. so, it's really exciting to be back in the market. tim: when it comes to retail excitement, what are you seeing in the metrics that you're looking at? i know it's a clicée but in 2000 201i would regularly get in and hoover or a lift in the driver would -- 2021, i would regular get in a car in the driver would talk to me about bitcoin. that has not happened. edith: the excitement in austin is definitely not the same as compared to hong kong or singapore air -- singapore or when i go to other conferences. yes, the u.s. mood in terms of the regulatory environment is not getting the taxi driver

excited about crypto at all for now. having said that, i think that things are improving. the u.s. government clearly knows we need to do more to stay ahead of the game. being a native from hong kong, originally, every time i go back, people are excited. in asia, particularly, regardless of the use case working and the nft, people are just excited. there are definitely people on the street. the hong kong taxi is more excited than the american taxidriver with ripped oak, for sure. sonali: that's fascinating. you were talking about huma finance. how important is the stablecoin world to the broader ecosystem and how vulnerable is it to u.s. regulation? edith: stablecoin worldwide is a super important topic.

the u.s. in many senses, i think, sitting in silicon valley, we need to get ahead of the game. i am looking at hong kong, which actually just launched stablecoin this year. for the past 18 months or so, they literally went worldwide talking to circle, ripple, the alibaba of the world, to make sure that government really are on top of regulations, to basically have very clear guidelines to approve various institutions to be able to support stablecoin. in that sense, in the cross-border payment, if we just purely let others define what stablecoin is about, it's really not good for the long-term finance ecosystem. the u.s. really needs to get our act together and catch up with, in europe, with micah, or hong kong and singapore, which already has clear recollections.

tim: so, you need to catch up with hong kong, singapore, and europe. what would you advise regulators when it came to stable wine? what do you want to see them do? edith: to start with, be more clear on which way we stand. it's great to see the fit 21 go through the house. still, we don't know. we need faster regulation. it's just that, to the rest of the world u.s. regulatory environments always seem a bit disorganized and chaotic. i think that just, for the u.s., unfortunately, for a lot of things, it's waiting and seeing to see who will get elected by the end of the year. i think that what was funny when i was in austin was i literally saw both sides of the house, the presidential candidates, have a voice in a crypto conference. i think that both candidates

know that, like crypto now, 52 million americans now own dope? in america. this is a really large population that would really swing the vote. unfortunately, i don't see all of these things playing out till after the presidential election. tim: edith young, thank you so much for joining us. appreciate it. coming up, a new synthetic dollar that correlates rackley with gold prices. sonali: earlier this hour we spoke with dave mccormick who said that america must lead on the wafer crypto. >> i was always worried about the national security implications and what is clear is we are in the next great wave of innovation and if america doesn't embrace it, we will be left behind and by embracing it, we can create great jobs and a

sources of innovation.

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sonali: tether has created a new synthetic dollar backed by gold. michael regan is here to explain exactly why this is going on. what's the purpose of tether doing this? why inching into gold? mike: the big picture is they want to diversify beyond u.s. tt, there are -- usdt, questions about what stablecoins will survive the regulatory environment. tether is investing in crypto miners, making investments in artificial intelligence, even medical device companies. with this project, but they are doing is really pretty fascinating.

they are actually buying gold, storing it with a custodian in switzerland, making tokens that represent the gold so that you can buy the tokens and basically own ownership in gold in token form. then what you can do is you can give them back to tether and they give you a synthetic dollar, like usdt but one related to gold. it's over collateralized, meaning say you put $100 of gold tokens on the tether, they will give you $75 back. why would you want to do that? well if you are bullish on gold, you are happy to own it but you can take the dollars back and go invest them elsewhere. crypto, a lending protocol, making even more yield and return off of that investment in gold. tim: i'm wondering who this is for, mike, if you think about it from the perspective of the organization. who are they trying to appeal to with this product?

mike: there's overlap with people who are goldbugs, for lack of a better world. tim: it's like you are harkening back to when the u.s. was on the gold standard. [laughter] mike: right, right, they assume there is some sort of demand for this but when you take it another step back, it's almost like a proof of concept for this new concept they have called alloy. sonali: like the metal. mike: yes. they clearly have ambitions, they have said, to do other things like this, to tether tokens to the value of other assets. whether it is another currency or who knows, they haven't asked ain't exactly what the next steps are. they want to make it broader. sonali: what's the biggest risk behind this? mike: market risk is the main one. if you are bullish on gold, you might be willing to take the risk, but if it goes down, but

you have to do is either provide them more collateral in the form of gold tokens or you get liquidated. clearly, the market risk is the main thing. obviously, there are people who still have a bit of suspicion towards tether itself. you have got to look at tether over the last few years. there was so much scrutiny, so much mud slung at them. usdt has earned that dollar peg. they've earned success in this project. tim: how will we know if it is successful? sonali: we will watch the amount of money -- mike: we will have to watch the amount of money locked up in it. we will watch to see how many are laying in the scheme. tim: always good to see you, mike. that does it for "bloomberg markets -- "bloomberg crypto." join us again next wednesday. this is bloomberg. ♪

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>> from the world of politics to the world of business, this is "balance of power."

live from washington, d.c. joe: it's another primary day. look at the fastest show in politics. we are looking into virginia and oklahoma. i'm joe mathieu alongside kailey leinz in washington. it's interesting, donald trump finds himself competing with the freedom caucus here in virginia. kailey: bob good is facing a primary from john wyer, backed not only by donald trump, but also the former speaker, kevin mccarthy, because of course he was one of the eight house republicans that voted to oust mccarthy last year and it is noting that main street are behind mcguire, seems a lot of focus in that you -- forces in the gop going against them. joe: is this the mainstreaming of john -- donald trump or just