Kingsview CIO Scott Martin discusses digitized currency, its possible trade behavior, and what government involvement could mean.
Program: Cavuto Coast to Coast
Station: Fox Business News
NEIL CAVUTO: With Danielle DiMartino Booth about the Intelligence LLC CEO, Chief Strategist, former Dallas Fed advisor as well, the Federal Reserve got kind of leery of this, too, I should point out. Scott Martin Kingsview Wealth Management, Fox News contributor. So, Danielle, we heard from Jerome Powell. He might take up this issue yet again today. We’re studying it. We’re looking at it normally. When you hear established US authorities talking about Bitcoin in that frame of mind, it’s their way of saying they can’t ignore it. Where are you on this?
DANIEELLE DIMARTINO BOOTH: I don’t think that there is a way to ignore the advent of digital currency. Know, we’ve heard from China that it’s very possible that the Beijing Olympics next year, that the only form of payment that’s going to be accepted will be a digitized yuan. So, the world is definitely moving in this direction. The largest economies are going there as well. There is no way to ignore Bitcoin. There is mass adoption going on right now, as we’ve seen today with Tesla. But as you mentioned, many financial institutions are truly legitimizing this form of currency, which is really a refutation of the trillions and trillions and trillions of dollars of debt being taken on, not just here in the United States, but globally. We’re pushing three hundred trillion dollars of debt. And this is this is kind of something that says, you know what, I reject where this is going. And this is a reflection of my rejection of that. That is, I think, the way Bitcoin is viewed throughout the world.
CAVUTO: You know, Scott, they say that investors in this class of assets are largely young or younger because they grasp the technology to grasp the potential. They just think it’s cool and they’ve seen people become instant millionaires investing at this thing when it was a few hundred bucks a coin and now north of fifty-six thousand bucks are gone and they want in on that party. I’m just wondering how you describe it as an investment that might now be going into the next level. This is just me wondering about this, where established players are more inclined to at least have it in its arsenal. And again, I’m talking beyond Tesla and Microsoft, Home Depot. We were showing that list. We’re going to rifle through some of the players again. What do you make of that as a young man yourself?
SCOTT MARTIN: Well, I was going to say I hate to ruin the premise, but I’m in it and I’m almost 80 years old, so that kind of ruins that whole deal, doesn’t it? But you know, what you’re right, Neal, about is that it’s just a lot of good face cream over the years. The result of that, Neal, though, is funny because as investment advisers, we have clients at all age ranges. And you’re right, a lot of it is the millennials, the younger generation, but a lot of the older folks, quote unquote, myself included, I am over 40. Let’s just put that out there. Do you want to get involved in that? And the institutions you mentioned? Why? Because to Daniel’s point, they see the opportunity here, whether it is talking against all the debt that we’re raising, whether it is talking down the dollar interest rate policy from the Fed, the fact that it is kind of this new neat digitized currency, the block chain process behind it is a little bit safer than what we deal with our own currency so far. I mean, there’s a lot of reasons to like it. I think the one thing that scares me a little bit, though, is it’s still in its infancy. And so how it trades and how it behaves over the next three to six months, five, you as you have all these companies pouring in like Tesla, that that put one point five billion of their balance sheet cash into Bitcoin. That still is risky to me because we don’t know what’s going to come of the government involvement or the Fed view of it. And when the government does get involved in this, I was hoping Danielle was going to say it, but I’m going to say it at risk here. That takes the fun out of it. Doesn’t I mean, that makes some of the upside, I think, kind of go away here. So, to me, as long as they stay out of it, that’s why I think it’s still an own.
CAVUTO: Well, they’re not going to stay out of it, I think they see this as a threat, or they certainly see it as a threat to the dollar and they’re not keen on that. They’re not going to say it as such, but they certainly intimated that. So, Danielle, the question then becomes what to make of this phenomenon here? Because with so many established players, at least including it in their list of assets, it is a sign that it’s getting mainstreamed a little bit, a little bit more. And I also think there’s another phenomenon going here where buyers can buy fractionally at fifty-six thousand. Sounds intimidating to you. What if you can buy in small doses and small takes and still have the same percentage run? I think since that started in a strong way, let’s say in the last six months particularly, that has contributed a lot to this rush of investors. Not they might all be getting hosed here. But your thoughts on that and how the authorities respond to that, or should they?
BOOTH: So, you know, there is indeed risk and you know what, you can put Bitcoin on a credit card. So, I think that there should be certain governors, certain limitations, certain guardrails out there, because it is still something that that trades all throughout the weekend. It can swing ten thousand dollars on any given day in value. So, you know, it is something that requires investor education. It’s the same as what we saw at the advent of the equity, a stock and what we saw with call options and put options that don’t require investors to put up the same amount of capital, but yet they do involve a great deal of risk. So, I applaud the adoption. I understand it, but I do see where governments do have a place in trying to look into it and make sure that that’s not someplace that they necessarily need to be. But to Scott’s point, that will take all of the fun out of it. But at least at least, Neil, you also have great hair. So that’s the upside.
CAVUTO: Well, there is some hope there. But, you know, one last thing before we move on, and I’m going to get you guys back to discuss watching the developments. But, Scott, this notion that a bitcoin can advance as the markets advancing it used to be the other way around Bitcoin would have a strong day when, let’s say the markets were not all the time, but a good deal of the time. Now they can move in tandem as if the markets see this not as a threat and vice versa for bitcoin. The markets and what they’re doing in a more traditional sense are not a threat either. Do you see that as a developed we should watch? Is it natural or they’re going to go their separate ways? They both can’t succeed together. What do you think?
MARTIN: I think it’s totally becoming a legit asset class and it hurts my old friend Gold to that degree, too, because as we see the government come out with these crazy spending programs, more infrastructure, more stimulus for everybody as they’ve killed the economy and tried to fix maybe their past mistakes, I think that’s really what Bitcoin is responding to. And so, you get a little inflation, maybe you get this economic reopening, you get more people using Bitcoin in different places. We already talked about Tesla. Now, I like how you put it, Neil Tesla. Maybe Bitcoin needs Tesla more than Tesla needs it, but maybe that’s just a symbiotic relationship. So, the reality is, is that as more adoption comes with the economic recovery, it’s good for the coin.
CAVUTO: Can you think about it? How you buy something with something that swings so wildly that as widely as it did before, is anyone’s guess, I guess. Danielle, that’s the thing that the regulators are going to look at, because you’re buying something that has value changes dramatically. Again, not with the 15 to 20 percent swings we used to see, you know, per day, but it does when. So, you’re buying, let’s say, a Tesla car. The price is one thing in the morning with this thing and quite another later in the afternoon. Right.
BOOTH: And that is at the very core of Bitcoin, again, something that Scott rightly says is in its infancy, in order for something to truly be a currency, it has to be a stable store of value, not just a medium of exchange. And on that count, it really does have yet to prove itself. So, it will take time. We will have to see it does stop moving in tandem with technology stocks, for example. I mean, that’s not that’s not necessarily the correlation that you want to see when go, go. Stocks are flying. So as bitcoin. And that is not something that you say to yourself, well, that’s you know, that that that that gives me a sense of peace. And again, something has to be a store of value. That’s why the US dollar retains its reserve currency. But it’s also why China’s trying to get into this realm, because China and Bitcoin both have their eye on the dollar.
CAVUTO: Yeah, and more like a target. So, we’ll watch it very closely. Guys, thank you very much. Don’t go away. We’re going to bring it back right after a report on what’s going on. Watch.