>> it is snowing out? i can't see. [stand by]

-- but enthusiasm still remains. lawmakers are getting closer to a stimulus deal. slowing toitcoin is that magical mark of $20,000. the all-important federal reserve strengthening its commitment to support the u.s. economy. it's taking an awful lot of support, but investors still remain so positive and how the economy will fare in the months to come. but perhaps not in the weeks. joe: the current environment for the economy is expected to be soft with this resurgent of the virus. but long-term expectations are good, and things would look even better most likely, at least according to economists and investors, if there is a stimulus deal. one and more get expanded unemployment insurance.

but unlikely to see any deal on liability protections or -- for state and local governments. so priorities for both parties are kind of off the table. romaine: and a much smaller package than what we were talking about a few months ago. this could potentially serve as a bit of a bridge until the economic recovery takes more pole. more, aning us now with big day. which, to you, is your headline of the day? developments on stimulus, or what we heard out of chairman powell? >> those two and economic data, a huge decline in retail sales actually. a stimulus say that package is a bare minimum for the economy to rebound next year to a decent degree. i think if we do not see a fiscal package, that would make things much worse going into the

beginning of next year. i think retail sales today really highlighted how rapidly the data is deteriorating. you saw a very widespread deterioration in retail sales across different categories. met really was worrying for was the very modest increase relative to online sales. we obviously are expecting something much stronger because online sales are replacing brick-and-mortar store purchases. so i would say that the fed will remain vigilant. they decided not to alter the composition of qe purchases, but they will if we really need to see that before the economy deteriorates significantly. powell was managing to walk that fine line and sounding dovish enough. let's listen to what he said

about the forward guidance. >> our guidance is outcome-based and tied to progress towards reaching our employment and inflation goals. thus, i progress to our goals were to slowf, the guidance would convey our attention to increase accommodation through a lower than expected federal funds rate at a higher-than-expected path of the balance sheet. overall, our interest rate and balance sheet tools are providing powerful support to the economy and will continue to do so. notable that he sort of said, yes, we can continue to expand easing, but what is needed right mall -- right now is more targeted focus. it is not the interest rate sensitive parts that need help. will the fiscal package be enough to get us across that line, especially without state and federal aid? yelena: the package now being discussed will provide, if it

goes through, a significant support to those most in need. those who are out of work. and that will provide significant help, a bridge over this pandemic. i think it is essential for the fiscal package to be implemented. because really, it would make things much worse. we expect a decline already in gdp in the first quarter of next year. we could see a decline as early as the fourth quarter if things continue on the same track. and a much steeper decline in the beginning of next year. romaine: remind me, we got an update on economic conditions. i guess there is not really an inflation structure right now in that forecasting. but i am curious as to what the general outlook is here that we heard today from powell in

regards to even the importance of inflation -- to ewven the -- to even the portence of inflation. yelena: bloomberg economics do not expect a significant increase in inflation. be some sort of a price shift. earlier price shift when the pandemic was raging, decline in prices. now we are going to see a rebound. constituteswhat significant inflation on a sustainable basis. something the fed will need to seek to raise rates. projections from the fed today, they downgraded the unemployment rate. inflation wereor not significantly upgraded. so we are still not reaching the 2% target until 2023, according

to their projections. so that just means we are not going to see inflation on a sustainable basis anytime soon. romaine: something to keep an eye on. yelena, always great to catch up with you. coming up, we're going to talk about volatility going on in the markets. both cases, their cases -- bull cases, everything in between. this is bloomberg. ♪ this is bloomberg. ♪

romaine: welcome back. we are focused on the enthusiasm in markets. i do not know how that differs from every other day, but you are always enthusiastic. one thing a lot of folks are zeroed in on right now is the vix. joe: absolutely. of course one measure of anxiety

out there, vix, tries to capture volatility, having soared very close to its lowest level since the crisis. still a little bit elevated from precrisis levels, but you can see how far it has come down as risk assets have risen. -- moreus for more info insight is kris sidial. everyone is excited. stocks are at record highs, cryptocurrency is surging. thereone negative, or are signs of residual anxiety? kris: that is a really interesting question. the index is trading at a five-year low. there is a massive reach for people trying to go for these homerun type of place. the appetite for high data products is tremendously high right now. take a look at the one-month skew on a five-year look back, trading in the 90% range. what this is telling his people

for looking for upside skew. people are going for that homerun type of play when it comes to the derivatives market. however, there is still a big amount of fear out there, and it's being shown in the vix futures. if you look at the back month stuff, the front month stuff, people are selling that and pushing into the backdated stuff. if you look at the move index, that measures rates volatility, we have been seeing in december there has been a slight bit in that and it is slowly grinding up. so people are concerned on that front. i have a lot of people asking me, what is the concern, aren't we in the clear? that is not true. a lot of traders are focused on the role of the fed and what that role will be in this new administration. the previous administration, their role was focuses -- focused on risk assets. today they were talking about climate control. when was the last time we hear

the fed talk about climate control? all this talk about the stimulus and rate controls, it does not matter right now. it is going to matter, and it will be much more pertinent when the administration makes this transition. and the traders including myself, we're not taking that for face value until we see how the administration acts. it'sine: kris, interesting. fed chair powell saying the treasury's does not need the federal reserve, it does not need his presence, but many would debate at the moment, it does. if we do see the initiation move to where it wants to go, what they care about is inequality. they hoped to drive unemployment to the very lowest possible. they want a hotter market, a hotter overall economy. why is that so different from what supporting asset classes is like? kris: now it is two different things. before, a lot of sentiment was

driven on the idea of the fed put. how many traders have said, yeah, i am going low on the market because the fed is going to back me up. if the case now is not focused on risk assets and it has shifted into something different, the sentiment behind the fed remains, and i would argue it does not. if the fed removes itself from risk assets and the polarization of how the prior administration looked at the fed, now basically evaporates, it's two completely different ballgames. the sentiment that regular traders and investors will have will not be as strong as if you know, ok, the fed is going to step in and help out with risk assets. but are they taking some of the balance sheet and moving it into other areas? is the focus on unemployment, climate control? there are so many other avenues where this could go. and if it is not in risk assets, i just think the sentiment will change. romaine: but the general consensus right now is that

there are actually a lot more people, or let more money moving back into equities, and that this will accelerate. madeere an argument to be that any kind of cash coming off the sidelines would actually change the structure of the volatility curve in any meaningful way? kris: absolutely. i think if more people are putting cash to work, then it's definitely going to drop that level. one thing we like to have a good look at is some of these target date funds. the target date funds that focus on selling volatility. it gives us a good idea as to where complacency is. a lot of guys who are just settling back in march were completely blown out, and now you are slowly starting to see some flows come back in in indexes that are more targeted. that gives us an idea as to where complacency really is. are guys looking at this and basically saying, yeah, we're

completely risk-on at this moment. of we gauge our sentiment complacency from the flows that come into those particular areas. in thewe come into q1 market is completely bit up, again, we want to see what is going to be the role of the fed, because we are not buying it. other people might say this is fully risk-on, but we have to assess things before we say, ok, this is an environment where some of the fiscal policy and spending will be enough to support this new administration. joe: all right. great stuff. really appreciate you joining us. our thanks to kris sidial. coming up, bitcoin finally surpassed $20,000 a coin for the first time ever. more on this rally with seth ginns, next. this is bloomberg. ♪ is is bloomberg. ♪

romaine: today we are focused on the enthusiasm in the markets, and what more says enthusiasm then bitcoin. hitting the $20,000 mark today. just this morning i think we were talking about $20,000. now it is $21,000. $21,100. i guess that is what people like about it, it goes up a lot. caroline: it goes up a lot, but remember, this is not that big a market yet. outsized demand can make outsized moves. we are looking at a store that

came out talking about a bitcoin whale. than 600 million dollars worth of crypto being amassed by one digital asset management. apparently they are teaming with a hedge fund aficionado, who has been putting money into this and supporting the fund. about $1 billion by early 2021. it seems institutional money is going into bitcoin, helping drive higher. let's talk about that. from coinfund, seth ginns. talk to us about institutional interests in crypto. seth: we are seeing a lot of institutional interests in crypto. the one river digital announcement is a big deal. it's really going to be the go-to place for an institution that wants to put $50 million,

$100 million into bitcoin and therum him -- and e combined in a fiduciary structure. they have coinbase on the backend or they are in a trust. so this is a big deal and they are talking about going larger which is great. there is so much innovation good happening in crypto beyond just bitcoin. a lot of the innovation is also level.ng on the ethereum romaine: can you distill as to why institutional investors are spaceg to wade into this in a way they were not willing to do a few years ago? seth: i think a lot of that ties into the brought me space full-time at the beginning of this year. institutional great infrastructure has really been built up from 2017 to today.

,nstitutional great custodians that is the rules engines to make sure that funds do not go places that they are not supposed to do. that is brokers. that is the derivatives infrastructure. have bitcoin futures in december of 2017. a, i think it is really having the infrastructure in place and having come in place since the last full market. secondly, this year the regulatory environment has been one of the biggest positive surprises. the office of the comptroller, the currency thing that federally chartered banks can custom crypto, that is a really big deal. going to seewe are more on that front down the road , that it is going to lay the groundwork to allow institutions to become to bilbao this is an asset class that is -- to become

an asset class that is here to stay. we know -- is it high net worth individuals, investment funds? where is the marginal dollar coming from? we know some companies have put part of their treasury stock into bitcoin. institutions is a broad category. what specifically do you see where the most action is? seth: it is interesting. now, ison today, right actually in hedge funds. it is a lot of different types of hedge funds. macro funds, funds that are actually focused on fundamental equities. but i believe there is a diversification benefit to bitcoin and crypto. that is where we are seeing action today. i was talking to a desk a few

days ago who say they have a $10 billion-plus hedge funds that are either buying bitcoin right now or in the process of onboarding. so that is really the money that can move quickly and the money that is coming in today. you look beyond that, we are talking to the benefit plans, we are talking to endowments, foundation. family office is high net worth, as you mentioned, as well. like theomething insurer massmutual putting $100 million of bitcoin into the general investment account last week. i was talking to another insurance company, and they are looking at it now. so, you get this competitive dynamic, and i would presume off of what microstrategy and square have done putting bitcoin on their balance sheet, you are likely to see more companies over time looking at treasury engagement with bitcoin as well. seth, you talk about the big money managers. one of the biggest is

guggenheim, and they had been putting through the desire to be able to buy crypto into some of their funds. earlier they came out with an eye watering, eye-popping viewpoint of where crypto is going. made thesten >> we decision to start allocating towards bitcoin when bitcoin was a $10,000. it's a little more challenging with the current price closer to $20,000. amazing over a very short period of time how big of a run-up we had. but having said that, our fundamental work shows that bitcoin should be worth about $400,000. caroline: $400,000. we had to call him up to make sure he was meaning it. yeah, talk to us about that figure. how quickly do we get there? seth: the way we are thinking

about it, and my involvement in bitcoin started in 2012 and coinfund was founded in 2015. the way we are thinking about it is if you look at the pattern recognition of bitcoin's ouf -- 50,000 to cycles, $1 $250,000 looks like the base case. my background is in equities. when tesla stepped up from the $25 to $35 range to $350, then it consolidated for a while, i think we can pull forward the next cycle, bitcoin go from 500,000 to one million, then consolidate for a few years in that range. but i think we can actually get tehre -- there in the 2021, 2022 time frame. romaine: we hope to have you back before it never guess that. seth, have a wonderful day.

seth ginns, head of liquid investment. bloomberg technology is up next in the u.s. and daybreak australia is off next in asia. caroline: have a very good, snowy evening. this is bloomberg. ♪ is bloomberg. ♪

♪ emily: i am emily chang in san francisco and this is bloomberg technology. upstart pops 30% out of the gate. we will talk to both ceos on the first day of trading. the retail landscape could be transformed for good post