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tv   Bloomberg Markets  Bloomberg  October 20, 2021 1:00pm-2:00pm EDT

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to boost public support for his economic agenda per the president spent much of tuesday meeting with key lawmakers to broker an agreement for a bipartisan infrastructure bill which has already cleared the senate with an attached social spending package that democrats are attempting to pass along party lines. new york city will require that all of its municipal workforce get vaccinated against covid-19. getting rid of the option for testing for you new york joined los angeles, san francisco, and other cities in an expanded mandate that will apply to about 160,000 municipal workers. mayor de blasio says 71% of them have already received at least one vaccine dose. the move drew the immediate ira of a powerful police union which said it would bring legal action against the city. russia is calling for major international aid to help the taliban control the situation in afghanistan.
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moscow hosted the radical islamic movement for the first time today since the u.s. withdrawal in august. president putin has urged the u.s. to gradually unfreeze afghan assets, warning that the lack of funds could push the taliban into arms and drug trafficking. queen elizabeth the second has reluctantly accepted medical advice to rest for a few days and has canceled a trip to northern ireland. that's according to buckingham palace. no further specifics on the decision but the 95-year-old monarch is said to be in good spirits, the disappointed she will no longer be able to visit northern ireland. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i mark crumpton -- i am mark crumpton. this is bloomberg. ♪
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>> is 1:00 in new york, 1:00 a.m. in hong kong. i am matt miller, welcome to bloomberg: markets. here are the stories we are following. digital becomes the first to go public in a traditional ipo. we will speak with george beard as the stock pops in the trading debut. this hour we will have more on crypto as bitcoin hits a new all-time record high off the back of the proshares debut. in just a few minutes time, we will speak with the ceo of philip morris, as they narrow their full-year guidance. could a chip issue? first, let's take a look at
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what's going on with the s&p 500, holding well above 4500 and 4537. this is for tens of 1%. the 10-year is doing a lot of nothing but still hovering around 1.6 four. bitcoin has set an all-new record high at $66,000. bitcoin is up another 3.5% today. as well as the etf. new york crude is up six quarters of 1%. here is -- here are a couple of the stocks involved in a bloomberg scoop. we learned a couple of hours ago that kay powell holdings may make a purchase of pinterest -- paypal holdings is considering a purchase of pinterest. pinterest is topping at about 12% at 61.93.
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a few, smaller am not -- internet stocks are moving on the news. they did pop on this news. twitter is little changed. we are getting breaking news from the fed governor randall worrall. he is speaking at a global conference, saying that he backs a november taper decision with a process in mid-2022 that the fed has not yet met it's more stringent checks for rate hikes. although he backs a taper, he agrees that there expectations have not been met. he says the fed is not behind the curve, he sees inflation declining next year but the risks are to the upside. so keep your eye on the rates
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market. there's not a lot of movement but there is interesting stuff continuing to come out of that conference. kathy woods said that she was an early believer in elon musk's ability to make electric vehicles and in bitcoin. she spoke with carol master earlier at the milken institute global conference. take a look. >> i kinda thought we were behaving like a value manager, long-term time horizons, looking for extreme values. we are using we are using spectacular growth rates that no one is expecting. tesla was our first proof of concept, a very busy people one.
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all we have done is use rights law, the centerpiece of our research, to try to figure out how quickly cost would decline in battery pack systems. and therefore, how much prices would fall for electric vehicles and how quickly the uptake would be. we saw elon musk tapping into it. >> was not easy to be invested early on. >> for us it was easy. the most important call that we made, in issue with tesla, was alright, tesla's battery technology is unlike any other my -- auto manufacturers battery technology. tesla is writing down the calls curve of the consumer electronics industry. laptops, cell phones, huge volumes. when you get it scaling, costs come down.
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it's called the learning curve. so elon, you had auto manufacturers and analysts laughing at him. he's building his car on top of cell phone battery's, isn't that funny. what they did not believe was that the engineering was possible. they just didn't think it was possible. he did. so even today, the cylindrical batteries that he has been using relative to a lithium-ion pouch, lower cost, remaining lower cost . which means any other auto manufacturer who wants the same performance and same range at the same price will have to lose money on every car sold. >> so it keeps him in a great position. >> that was the first call we
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had to make. elon musk and tesla. >> this is a story you have talked about. this is 3000 in our base case. tell me more about bitcoin. everything is so debated, we are seeing more legitimization as we see regulators moving around the world moving forward. what is the long-term price when it comes to something like cryptocurrencies in bitcoin. >> bitcoin specifically, we got involved when it was a $6 billion market cap. it was a $6 billion cap then, now it's over a trillion. we were asking the question in 2015, could bitcoin serve in the role of money? we came to the conclusion it was
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possible. our original paper was torn up and as we were going through it we said this is the first -- this is the rules-based monetary system i have been waiting for since we left the gold exchange standard in 1971. and i said to him, how big could this be? he said how big is the u.s. monetary bank? remember back then this was a $6 billion cap. it was a 4.5 trillion monetary base. today we are at a point 5 trillion. matt: such a cool reference. cathie wood speaking to --. art would -- he has been at the forefront of a lot of economic trends. and also widely panned. especially by the left.
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it's fascinating that he is still involved in finance. a stronghold digital mining, a trading debut today. there's an actual ipo. so unusual for crypto. we will speak to the ceo. this minute we are going to talk to him. greg, thank you for joining us. why did you choose a traditional ipo when all of your friends are going spat -- spacs. >> we did have a lot of interest from spacs. i think it's part pride, we wanted to be the first bitcoin miner to go through the regular process and go through the front door. and it's part economics. we did not want to give up any of our company to the spacs if
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we didn't have to. we think we have a great business model being verbally -- vertically integrated. that led us to the decision to go through that process. matt: what is your business model? i don't know if it's a coincidence, but it's great timing for you to go public on a day when bitcoin it's an all-time high. what makes stronghold digital different? >> i think we will see new all-time highs with coin -- with bitcoin every month. it's getting an option that many have been talking about for years area what makes us different is that we on the power assets -- for years. what makes us different is that we on the power assets to mind the bitcoin. many of our competitors by the power from others. for that reason, our cost of
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power is half of the industry average, giving us that our margins. and more downside correction. matt: have concerning to you is the power use in the industry and the slap against green values that bitcoin seems to have on it? >> the source of our power is waste coal. we are cleaning up a legacy waste product left behind by more than 100 years of coal mining. we are leaving behind a legacy of cleaner neighborhoods and communities which are today living with a toxic waste of more than 800 million tons in pennsylvania alone. the industry has heard the message. we will see others pursuing more green sources of power. but we are the only ones on process who are environmentally beneficial. the byproduct of that process is
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power which we used to mine bitcoin. our origin was as waste coal reclaim her's -- reclaim her -- reclaimers. matt: when i think about the problem with bitcoin mining, if i want to start a new business i'm worried about the power crisis. i wonder if your model gets you around the soaring prices. coal has gone up, first use coal has gone up 250% year-to-date in price. i also wonder about your access to chips, getting machines. is that a one-time purchase and you are done? do you need to buy new machines all the time? what did the price issues look like? >> the price of our power is not dependent on the price of gas or any other commodity. our cost to mine bitcoin is under $300,000 a coin. we have not been impacted by the
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run up across the board. if diesel fuel is slightly more, and we have to use machines to get this to the reclamation sites we could see some inflation but certainly not tied to power prices like the other plants. with regard to chips, that's a great point. without chips you can't make machines. there's probably a year or two more of delays in the supply chain. so really having access to industry partners who make the machines that we do is an important part of our story. matt: it's great to get a little time with you. on the day of your ipo. on the day of an all-time high for bitcoin. stronghold digital mining ceo, greg beard. coming up, philip morris warning the global semiconductor
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shortage is hindering its growth. i'm talking about the mar bra maker -- tomorrow bro -- the mar bro -- this is bloomberg. ♪
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matt: this is bloomberg: markets. shares up philip morris -- of philip morris is higher today. even though they are being crimped by the global semiconductor shortage. supply is tight into the first half of 2022. here to discuss the result is the international ceo. we have been talking about this
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for a couple of days. it's interesting that a big tobacco company has a chip shortage issue. as we move into the electronic smoking age, you need these things. how much of a crimp is this putting on your future sales outlook? >> i'm happy to be here. it will depend on electronics, but if you want to make a better and safer product -- electronics control the temperature. this is critical in our business. we have had a spectacular year [indiscernible] with growth at six point set -- [indiscernible]
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but the fact of the matter is, the shortage of the semiconductor has hampered our ability. we cannot really conduct competitive activities. we could see [indiscernible] our business. despite the fact that we are about to see strong results for the year, we know now that we will see better results after the shortage. [indiscernible] the question that ceos and other industries are being confronted with. the models don't ask this question [indiscernible] you have because some people [indiscernible] maybe beyond the second half of next year.
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it's a lot of dark scenarios. i'm hoping the solutions will be there. and in general about the strained post-covid supply chain. matt: how much future nicotine intake is going to be aiko's? how much is going to be they paying? i remember when we were taught -- vaping. i remember when we were talking about alternative cars, was a going to be hydrogen or batteries? battery won they are. will there be a winner in the future smoking? >> i don't think so. we have the technology and innovation, the most oranges the growing markets. more people are aware of the
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products and understand that this is a better choice. a lot of stars are aligning to support this market. five to six years ago we started in japan [indiscernible] and the market is almost one third of the total market. we see customers moving to the new [indiscernible] i think we are at the beginning of the end of combustible smoking. which is the best thing which can happen for individual smokers from the public and also for the companies who walk the talk and put the money behind the innovations and services who want to solve the problem. i think the changes will go far. because the customers are looking into this.
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you will have room for electronic signature -- cigarettes. and there will almost certainly be other forms of noncombustible delivery. customers are looking for other forms of noncombustible product. matt: when do these noncombustible products start to get into the zeitgeist in terms of marketing? i grew up watching sean connery is jane bond smoking a cigarette. or steve mcqueen lighting one up. i don't see the same thing happening these days, certainly not in fillmore on the racetrack -- in film or on the racetrack. >> [indiscernible]
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has change over the last few decades. [indiscernible] we also have to be very careful with the marketing media and the challenge. because on the other hand, there were unintended consequences. which is use and underage people using these products. it should be marketed to adult smokers, but not -- some of the examples you gave might be inappropriate. but you have a growing penetration of this product. they penetrate day-to-day life for smokers. [indiscernible] that's to marketing, and product placement. what's more important is that
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the customer is well-informed about the risk of smoking and why these alternatives are better. customers should know that this product [indiscernible] matt: thank you for joining us. we have to wrap it up. i appreciate your time. this is bloomberg. ♪
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matt: this is bloomberg: markets. i'm matt miller. the s&p 500 continues to rally, bitcoin is at an all-time high at $66,406. this is bloomberg. ♪
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>> the white house is outlining its plan to vaccinate younger
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children against covid-19. the plan would focus on lower doses given with smaller needles. kids would be able to get vaccinated at a doctor's office, pharmacy or even at school. the country has ordered enough supply to vaccinate every child between the ages of five and 11. vice president kamala harris and labor secretary marty walsh met with workers today ahead of the president's deadline for federal employees to improve their vaccination status. proof must be shown by november 8 or face unpaid suspension followed by termination. it is the latest stepin the president's push to increase vaccination rates. it could include a measure to expand or temporarily remove the cap on the federal deduction on state and local taxes.
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the house ways and means committee chairman said addressing the $10,000 deduction limit imposed by republicans in their 2017 tax overhaul is still on the table. key democratic advocates said they prefer a complete repeal of the cap. a volcano in southern japan erupted, sending gray smoke into the sky. the warning level was raised to 3 on a scale of 5, warning hikers and residents to avoid the mountain. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg.
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>> welcome to "bloomberg markets ." matt: i am matt miller. welcome our audiences. bitcoin rallied to a record over $66,000 for the first time. there is optimism after the launch of the first etf for investors. we will discuss this with juthica chou. netflix posted its best subscriber growth of the year. more than formally in subscribers were added in the third quarter. we will break this down with dan morgan. bloomberg has learned paypal is exploring an acquisition of social media company pinterest with a potential price tag of $45 million. amanda: that is having an
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implication for the stock. that is one of the names we are watching. overall, markets in positive territory. for the s&p, that is every subgroup expect the tech and communications group. netflix is part of the problem. we are watching that stock act as a bit of a drag. financials are doing well. we are keeping our eye on energy, which remains in positive territory. bitcoin is having a decent day. new record territory for bitcoin. for what its worth, bloomberg had a chance to catch up with the former goldman sachs ceo. he is spending his time on philanthropy and trading.
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>> a lot of bright people think it has a bright future. i am telling you, i have my whole foot and four toes in the old world and it is not something i gravitate to. i remember when they were auctioning off spectrum for cell phones, and saying, why would anyone need a spare cell phone? just pull up to a phone booth. the point is, there are a lot of things in this world that have worked out awfully well. >> you sound, for someone who used to run a bank, pretty constructive. >> i ran a bank, i ran risk.
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you have to separate fact from opinion. nobody knows the future. there are all sorts of things. there are a lot of things that i could not and would not have anticipated and no one else would have, either. to just come out and say a market that is already in excess of $2 trillion, the faces regulatory headwinds that a lot of people do not like and would enjoy seeing crushed somehow -- every day it does not look like it is flourishing, but on no days does it look like it is dying. erik: do you own any crypto? lloyd: no. matt: what an amazing interview. you can watch that interview. lloyd said he does not always
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set his alarm anymore, although he gets up during the night instinctually to check his portfolio. he does a lot of day trading, apparently. he does not own any crypto. do you think that is weird that he does not own any, if he is that open to it? amanda: it seems a bit contradictory to me. he said it has to be something. it has to be real, it is a huge market, but then he does not own it. matt: follow the money. great advice. let's get to the stock of the hour. we had a bloomberg scoop a couple hours ago. paypal is reportedly in pursuit of pinterest. the deal would be worth about $45 billion and push 2021 to the busiest ever year. >> pinterest competitors rising,
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as well. want to focus on the chart. pinterest shares were expected to be $70 a share. the company valued at $40 billion if the deal were to go through. when you look at the pinterest trajectory, it is coming down from a peak earlier this year to the tune of about 20%. if you bought pinterest shares in february and then took the deal that might potentially come through, you would still be losing 20% of your investment. it will be interesting to see if the drop has occurred. in pinterest's last earnings report, their monthly average users dropped for the first time since 2015. since that report, the share has dropped 32%.
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this is a company that might be up for grabs. on the paypal side, it is a different picture. this massive boom in paypal shares, a lot has to do with the crypto trade. you are seeing their market cap head to $320 billion. amanda: really good perspective on pinterest investment. where would this deal rank in size? kriti: potentially one of the biggest tech deals ever. paypal has been on the hunt to find two deals in 2020. its biggest deal -- you did see two big tech deals in 2020, as well. you would see this become one of the biggest tech deals in the last couple of years. matt: thank you very much.
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it seems paypal is interested in pinterest. coming up, squid game helps netflix posted its highest subscriber growth of the year. the fourth quarter outlook is underwhelming to some. we will talk about it with dan morgan, senior portfolio manager at synovus. this is bloomberg. ♪
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matt: this is "bloomberg markets ." netflix subscriber growth doubled from last year. it tepid fourth quarter outlook leaving shares drifting lower.
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joining us is dan morgan of synovus. what is your take on the earnings? we all knew squid game was a massive hit. how do you read it? dan: to be quite honest, i think this report was a little bit of a sigh of relief. if we look at netflix earlier in the year, the numbers were underwhelming. they came in, 4.4 million subscribers, 8.5 million in the fourth quarter, streams at 8.3, then the stock sold off. there were so many high expectations for netflix in the second half of the year. everyone expects the contents slate to be positive. there is a lot of high expectations on netflix. i think it was more -- i did not
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interpret the guidance in terms of earnings and revenues. they were within range. it was a surprising reaction. overall, i think it was a sigh of relief for people that are still bearish on netflix. amanda: even those that are bullish to have the caution evaluation. the most hardened believers netflix so you cannot call this inexpensive. where'd you come down on valuation? what do you need to see longer-term in those projections to help justify where this trades? dan: it trades about 55 times earnings. revenues were only up 17% last quarter. topline growth does not substantiate the multiple. netflix has a conductor going forward. we know subscriber growth in the u.s. and canada is very mature. there is a lot of competition. going forward, the best opportunities for them to really
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grow our international space. the average revenue per user they get in international space is much lower than it is domestically. how can they substantiate that multiple when the growth rate is becoming more mature? and by adding more subscribers in international markets, the amount of revenue is less. it is tough on the netflix valuation because they are not growing in line with the current multiple. it will be more challenging going forward. matt: i have to ask you about ibm, it is also in your portfolio. what do you see as the outlook for this company that is so reliant, dan, on chips, obviously? dan: this will again be a show me quarter for ibm. they are a company that is in never ending restructuring mode. that is helping their cloud unit, which is 40% of their
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revenue. we are looking at $207 per share. it is a free cash flow story, it should generate $35 billion in revenue. they get a little bit of an uptick in terms of their mainframe business, we are looking for revenues to grow to percent this quarter year-over-year. they have a lot of overhang. they are in the wrong segments of technology in terms of not being focused on cloud. they have exposure in the chip space, that can hurt with supply constraint. for your viewers watching it, i would view ibm as a pure dividend play. their yield is 4.6%. take the yield and hope for the best and maybe they will start to improve on the top line. amanda: i have to ask you more broadly about techs in general as we ponder if the fed will need to rethink.
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we are seeing high inflation data around the world. there could be renewed discounting the needs to go on. do you remain bullish on techs in general because of the growth aspect? dan: you are exactly right. we have the cyclicals discretion of-based materials, their growth depends on the economy continuing to improve. for technology, as long as the i.t. budgets stay strong, i would think they would prosper on either environment. you will have money going toward companies that are growing away from the -- we are looking at more regulation, more debt, possibly slowing of gdp growth. i think techs perform well under both scenarios. the deep cyclicals get hurt.
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i have always been intact for 30 years -- i have always been in tech for 30 years and it has done well. amanda: call us when you get bearish on tech. dan morgan, senior portfolio manager at synovus. coming up, we are watching bitcoin hit records. we will check in with juthica chou. that is next. ♪
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amanda: this is "bloomberg markets." am amanda lang, alongside matt miller. bitcoin above $66,000, an all-time high. it started trading just yesterday. with us to discuss it all is juthica chou, kraken head of otc
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trading. we know the etf is seen as a key moment for bitcoin in terms of the credibility factor. put into context for us about what you think the price hitting this level and if you think it will only keep rising because this is the beginning of trading as an etf? juthica: it was a huge watershed moment for the ecosystem. regulatory blessing. opening it up to a whole new range of participants, whether it is individuals who can buy it in their retirement accounts, or institutions more regulated. it is validation of that narrative, as well as new inflows coming into the etf. north of 500 million of the $1 billion traded in volume. bitcoin is an investable asset.
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matt: in terms of institutional adoption, what are you seeing right now, and what do you expect? what does the trajectory look like? juthica: to be honest, we saw a lot of rotation back into bitcoin the last couple of weeks. bitcoin rallied 40% off of september. some of that was some of the risk out there with china dissipating the market, and part of it was the noise around the etf, whether it was providing liquidity or institutions making more of a speculative view. i think we saw a lot of that play out but now it is a conversation around, how much more will this grow the inflows into bitcoin? $1 billion to $2 billion? that is a conversation folks are having now. they want to see the price action of the etf, and the etf
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options. matt: you mentioned china. it seems like they have outlawed bitcoin five or six times over the past five or six years, and yet, it continues to march to new highs. what kind of presence does bitcoin, crypto have in china? juthica: the most recent crackdown, we did see mining move away from china. we saw leverage come down and ecosystem. there were not real actions taken. at the end of the day, bitcoin is resilient. a lot of the news tends to be worse than the actual action. china has talked about banning bitcoin baby a dozen times. if you look historically, the action over the next one to two months has been more positive than negative. amanda: kraken just settled over
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regulatory issues. it is not the first kind of event that you could argue to trying to figure what the regulations are in trying to match them up with reality. how much change do you think will happen? some think the u.s. is lagging. juthica: i think the regulatory clarity is heading in the right direction. with the etf, there is something to point to as a clear framework to operate under. a level playing field is starting to play out. regulation takes time. in particular, regulation compared to how fast crypto moves. matt: $100,000, do we hit it by the end of the year? juthica: never say never.
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one year ago, we were probably trading at $12,000. it is crazy to think we are at $66,000. there is a lot of money on the sidelines. when you get some of the large pension funds, it does not take much to push price up another 50%. amanda: the number of women on the kraken consumer app, up 40% year-over-year. what do you attribute that to? juthica: it is a testament to the kraken consumer app and how we have been able to reach wider audiences and get into the mainstream. the number of females are up 40% in the first half of the year. it is a great statistic, a great trend and a testament to the consumer app in the teambuilding being an awesome experience for a broad audience. matt: thank you so much for
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joining us. a fascinating story, fascinating company. juthica chou, head of otc options trading for kraken. as we see, bitcoin hit another all-time high. crypo, the entire universe of crypto, bitcoin is xbc currency. right now we are trading at $66,380. it is amazing to me, as i bought my first bitcoin for $600. i wish i bought many, many more of those. this is bloomberg. ♪
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mark: i am mark crumpton. president biden heads toward his
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childhood hometown of scranton, pennsylvania. he will try to boost public support for his economic agenda. he spent much of tuesday meeting with key lawmakers to broker agreement for a bipartisan infrastructure bill that has already cleared the senate and a social spending package that democrats are attempting to cast along party lines. the u.k. will not yet bring back restrictions to help curb covid restrictions. instead, health officials said they will be focusing on the introduction of antiviral treatment and accelerating the national rollout of booster vaccines. new daily covid 19 cases in the u.k. have persisted above 30,000 cents early september. brazilian lawmakers said the president should be charged with nine crimes, including crimes against humanity. senators are wrapping up their

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