Fed Aftermath🚀Crypto Rallies🔥Matthew Sigel Van Eck

After a lengthy pause, the Federal Reserve on Sept. 17 announced a quarter percentage point cut to its benchmark interest rate. Economists say it is likely the first in a series of reductions that should make borrowing more accessible for consumers. 

Guest: Matthew Sigel, Head of Digital Assets Research & Portfolio Manager, VanEck
VanEck NODE ETF more info➜ https://bit.ly/VanEckETFNODE

00:00 Intro
00:25 Was Powell hawkish?
02:00 Next meeting expectations
04:00 How many rate do we get?
05:00 End of year predictions
08:00 $NODE ETF performance vs Bitcoin
11:00 $AVAX potential
12:45 What to watch in the next 3 months?
14:00 Does the rally continue in 2026?
15:00 Outro

#federalreserve #bitcoin #Crypto
~Fed Aftermath🚀Crypto Rallies🔥Matthew Sigel Van Eck~
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Episode Transcript

Speaker 1 (00:00):
All right, so welcome in everybody. We're going to get
into it today all about what chair Pale was doing
yesterday and reference to a quarter point basis rate cut.
It's going to be a good one. My name is
Paul Baron, welcome back into the show. Joining me today
is Matthew Siegel coming over from Vanak. You guys have
seen him on the show before, but Matthew, welcome in.

Speaker 2 (00:19):
Hey, Paul, Hey everyone, nice to see you.

Speaker 1 (00:23):
And of course, now that we are past the FOMC
meeting for September, we get a quarter point rate cut.
Whether you were expecting it or weren't expecting it, What
were you looking for out of Chair pal yesterday? How
did you deliver for you guys?

Speaker 2 (00:42):
Yeah, the betting odds and the kind of options implied
move by the FED was kind of baked in the cake.
So I don't think this should have been a huge surprise.
But I think just how polarized the FED has become
that there was maybe like a vocal minority that thought

(01:02):
that Howel and the team would dig in their heels
and not cut. And so what we have here is
I think a relief rally, and the market's now implying
three rate cuts by the end of the year, up
from two, So a little bit of a marginal tailwind
on the liquidity trends and should be supportive as we

(01:24):
enter the more seasonably favorable part of the year.

Speaker 1 (01:28):
Yeah, for sure. I want to share a story off
of Reuters where they were breaking this down. One was
this right here, and I'll zoom in on it for
you guys. Pal to temperiial enthusiasm in the markets. This
was really kind of on everyone on a more aggressive
path toward easing. He also noted the softness in the

(01:49):
labor market, which is interesting to me that he's at
least validating what we know has been a big problem.
And then he's talking about reserves, which is reserving a
larger cut for more serious conditions. I mean, gosh, you've
got jobs at loss, at all time high re reports

(02:09):
from the BLS. I mean, the only thing that could
really go wrong now for the FED is going to
be higher inflation, which only exacerbates bagflation. How do you
think power responds to this on the next meeting.

Speaker 2 (02:22):
Yeah, I think what they were reacting to is the
now clear deterioration in the labor market, and you heard.
Some of the first questions in the press release centered
around the high unemployment rate for young people and for
people of color, So you know, to the extent this
institution is politicized, you know, those on the left are
going to be very focused on the job market, and

(02:45):
given that deterioration, I think it gave the chair cover
to start on this rate cut you know path. So there,
you know, there's a new forward, there's a new FED
board member, which is Trump's choice, so on the margin,
like that will be helpful towards his preferred path of
rate cutting. There's also I think a strong consensus that

(03:07):
at four and a half percent, monetary conditions were restrictive.
And given where the inflation rate is, yeah, it may
tick up a little bit, but clear deterioration in the
labor market. Inflation's you know, still not rising, so why
be accommodative. So I think it's you know, another quarter

(03:29):
point cut in October is you know, a very good
bet unless inflation accelerates materially or the jobs market improves.

Speaker 1 (03:40):
Poly Market is kind of interesting because if you look
at polymarket right now, this is how many right cuts
in twenty twenty five, And if you kind of hover
over this right now, what you're dealing with is in
between three rate cuts this year, so that would give
us an October. Would that mean in your opinion, that
he bails out of a late year rate cut or

(04:03):
is it one of those things where he would come
in and do a maybe a boom boom boom. What
is your thought of where these would fall into twenty
twenty six.

Speaker 2 (04:15):
I think that the next meeting, the rate cut is
pretty high probability, and then after that they're going to
let the data decide. So you know, I don't think
that market participants should be making a strong call on
December or even next year.

Speaker 1 (04:34):
Yet, Well, it's going to be interesting because I think
we are everybody's leaning into this because of the cycles
that we've dealt with. When you look at the S
and P five hundred, all time high gold now performing
all time high Bitcoin as we're talking today nearing one
to eighteen, I mean, we've got a lot of positivity

(04:57):
in the market. Do you feel like this holds for
Are now as a very boom rich market as we
move into September, October, November.

Speaker 2 (05:11):
In the strategies that I run, we are we still
have considerable exposure to risk, and we haven't lightened up
on some of our higher beta picks yet, so you know,
I'm focused on the bitcoin market and the equities that
surround it, and for bitcoin at least, we haven't seen

(05:35):
the type of euphoria that usually marks peaks. So a
couple of kind of tactical indicators that we look at.
We look at how much does it cost to put
on a leveraged position, so what are the funding rates
in the perpetual futures markets or to put on a
leverage position on the CME. And when those rates really spike,

(05:57):
you know, into double digits, that an indication of strong euphoria,
and actually the forward returns for bitcoin deteriorates significantly when
we're in that kind of double digit funding rate. That's
not the case right now. We also look at unrealized
profits in the bitcoin blockchain, so you can see when

(06:17):
every coin has transacted and at what price, and when
the unrealized profits are very high, that also augurs pretty
poorly for forward returns over kind of one to three months.
We're not seeing that right now now. One thing that
I think, you know, I am on the lookout for

(06:40):
is the AI trade because many of the bitcoin minors
have been the best performing stocks this year. Some of
them have doubled, tripled on the back of this AI convergence,
So the bitcoin minors repurposing part of their electricity capacity
to serve the AI market, and the you know, volatility

(07:02):
on those stocks have has fallen quite a bit, and
they're starting to kind of show parabala in the shapes
of their charts. So I wouldn't be a surprise to see,
you know, something like another deep seat moment that kind
of you know, creates some fear in the market and
causes a bit of a short term wash out in

(07:24):
some of those trades. And given like in video's role
in the S and P and the Nasdaq, you know,
maybe that has some some knock on effects. So I'd
say that if i'm you know, i'd be more cautious
around that part of the market which is showing some
signs of view for you, rather than Bitcoin specifically. But
given how the miners have become such a larger part

(07:45):
of some of the crypto equity universe, you know, that's
something to look out for.

Speaker 1 (07:50):
I would say, yeah, I think, and obviously you're reference
to a lot of what you guys are doing in
the no DTF. Here's a quick list of your current
holdings around this and within this right now, there's a
handful of these that people would say, well, hey, mining
has been volatile to your point, is it time to pivot?

(08:11):
I kind of hear maybe that there's a pivot here
into some other risk assets. But how would you guys
play this out?

Speaker 2 (08:20):
Yeah, haven't taken down the exposure in these stocks yet
they've been great performers. There's still evaluation arbitrage from our perspective.
When you look at some of the pure play AI
data center companies like core Weave or Nebuous, they're trading

(08:43):
you know, more than twenty times they're ebada. And when
you look at the bitcoin miners, they still trade at
you know, three to six times there ebada. So it
still makes a lot of sense for these miners to
continue to repurpose some of this capacity to serve the

(09:03):
AI market. It's clear that many of the leases that
they're signing are still ahead of us. In Q four,
we're expecting a number of announcements from some of our
holders in terms of signing tenants for their AI data centers.
So I still think this is a tremendous place to
be in the market, and you can see from our

(09:25):
exposure that those stocks dominate our holdings. But one thing
just to note about that this strategy, the Banac Unchain
Economy ETF the ticker is NODE, is that the volatility
of this fund is about half of what you see
from most crypto equity funds. When we designed it, we

(09:46):
were taking in the feedback from many investors who want
exposure to crypto via equities, but are just spooked by
the high volatility of the pure play miners, the exchanges
and the leveraged hotalers like micro strategy. So what we
did with this strategy is really take a diversified approach.

(10:08):
As you noted, the markets at all time highs, Bitcoin's
at all time highs. There's no need to be a
hero and take ten percent single stock positions. We're going
to for now stay very diversified and let the rising
tide of AI and bitcoin lift our stocks. And I'm
very gratified that since inception we've quadrupled the performance of bitcoin,

(10:31):
and yet we've done that with lower volatility than bitcoin.
So I can't promise that's exactly what will happen in
the future. But it's exactly what we design the product
to do, which is give exposure to the adoption of
digital assets that happens to be through the AII hybrid

(10:52):
bitcoin mining space right now, but do so in a
way where the ninety percent draw downs that we saw
last sight hopefully won't materialize because we just don't have
those huge positions in the leverage names.

Speaker 1 (11:06):
I know. Van K has very expanded into a variety
of blockchain components. One of the big movers that we've
seen has been Avalanche. This was kind of an interesting
point right here on their TVL in DeFi now starting
to accelerate, Avalanche now starting to move in terms of
the token the potential for that market because this could

(11:28):
this could end up bringing in a lot of new investors,
not only in the Node fund, but in other funds
under van K. Are you guys looking at any of
those kind of scenarios that are playing out in the
market right now.

Speaker 2 (11:41):
Yeah, we like Avalanche. We hold it in a couple
of our private strategies. In fact, my colleague Pronav who
runs Digital Assets Alpha, our liquid token hedge fund, he
recently launched a purpose built fund just to invest in
the Avalanch ecosystem. So what Avalanche is doing with these

(12:03):
subnets which make it very easy and affordable for anyone
to spin to spin up essentially a layer one on
top of Avalanche customize their validator set. You can make
it kyced, you can make it open, It's very inexpensive.
It really gives a lot of flexibility for tradi fi

(12:24):
institutions who want to build on crypto rails. So nice
to see AVAX catching up here, but it's actually the
best performing layer one to opn over the last month.

Speaker 1 (12:36):
I'm intrigued to see how this is going to play out. Matthew,
what are you guys watching for right now? If you're
looking at the three month window here toward the end
of the year, is there anything that you're just keeping
a very close eye on for the market as it
stands today.

Speaker 2 (12:54):
I think it still just goes back to the internals
of the bitcoin market. Are people super greedy or are
they super feel fearful? And you know we're not. We're
kind of nowhere near that greed markers, So we're going
to stay constructive. I know it's easy to be bearished

(13:15):
with stocks at all time highs, but that's the nature
of stocks is that they tend to be at all
time highs as money debases and corporations grow. So you know,
margins for the Fang seven are very high. They have
great balance sheets that the fundamentals don't look anything like

(13:36):
the dot com bubble in two thousands. So We've made
some moves around the edges to take down some of
our US exposure a little bit at the end of
last year. But you know, I'm just looking for signs
of euphoria in the crypto market and not seeing them yet.

Speaker 1 (13:53):
All right, So do you think that is a twenty
twenty five event? Do you think we see the top
this year or do you feel like this rolls into
next year.

Speaker 2 (14:05):
We're gonna have to wait and see, Paul, Like, I'm
gonna let the markets tell me the answer to that.
I still lean towards that the four year cycle has validity.
That as we move into the midterms, you know, the
pace of deregulation may slow. There'll be some uncertainty around
how that will shake out. Not all the elections have
gone the Republican's way in the last like six months

(14:28):
in terms of some of these special elections, So I'm
on the lookout for that, but I think it'll be
accompanied by more tailwinds first, is my guest.

Speaker 1 (14:40):
Yeah, yeah, what's good news. I think in general it
tells us today, guys, if you're watching the show right now,
we are up again, and it looks like we are
going to see an upward trend right here based on
the tailwinds of what happened yesterday at the FOMC meeting.
Even though I still feel that Powell is a little
bit hesitant for whatever reason. The real question, I think

(15:03):
is what will he look like at the next FOMC
meeting going forward? So Matthew Siegel make sure and catch
him over on Twitter of course, and following there. Coming
in from Van k today. Thanks for coming out on
short notice. We appreciate it.

Speaker 2 (15:18):
Thanks Paul, see everybody, you.

Speaker 1 (15:21):
Bet all right. So you guys, if you're not part
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(15:44):
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