Latest / The Curve / TCW22: Why the crypto market is like a naughty teenager and Australia’s surprise interest rate announcement

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TCW22: Why the crypto market is like a naughty teenager and Australia’s surprise interest rate announcement · The Curve

• 0:00
  Hi and welcome to the Curve Weekly. The podcast that keeps you up to date with all the money,
• 0:06
  business and stock market tea. Everyone should experience for us at least once in their lives
• 0:10
  and Annie shouldn't miss out just because she can't afford it. Help me, I'm poor. Firstly,
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  this is so self-indulgent. We're in Italy. Incidentally, recording a podcast, all our friends
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  are about to start a long Italian lunch. We are here working. We're in the rooftop. Yes.
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  And if I look to my right, I see a giant big rock face. And then, I mean, we're kind of in a bit
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  of a castle, aren't we? Yeah, we're in the house. There's 16 people here, probably here in the back.
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  Yeah, so we thought, I mean, we really should lock ourselves up in one of the small rooms in the
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  house and record for audio purposes. We can use something self-indulgent for once. And
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  unfortunately, if this audio sounds kind of shit, we're really sorry, hopefully it sounds
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  okay. Sorry, some of that tops just having a bit of a Italian holiday. It's getting a bit hot.
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  It's going for a sister. So, excuse me, she's got a black screen. We're just like determined
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  to record a podcast almost every time. And honestly, for audio purposes, technical purposes,
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  everything else, other than the fact we want to record a podcast. I've probably got about
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  about 10 minutes to read before I start swearing. But anyway, yes, there's been lots going on
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  in the stock market this week. Took the round crypto. So much more on crypto, it's like a kind of
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  innkeeper. It's probably changing right now as you speak. Oh, yeah. It's like constantly. And
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  is it good for crypto investors or shut for crypto investors? Well, it's not good for the
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  crypto space in general. So, remember, ages ago, when Taylor Swift was like offered, I think it's
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  a billion dollars to promote a, the FTX token. And she was like, is it an unregistered security?
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  That's right. Yeah, when you can't sell it to the public, if you can't buy and sell it. So,
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  she was doing her due diligence, which was great. And also just Taylor Swift coming out with like
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  the fact that it was all guys that all know. Yeah. So there was so many men like sports men,
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  who were the, some of the guys that represented this coin? Or like Tom Brady and Mike, there was like,
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  yeah, there was lots of them. But you know, it's kind of when you get paid a lot of money,
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  you're like, oh, I don't care about the, you know, the legality, but she was like, hang on a second.
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  I don't seem right. She's so like for her fans, you know, she's like, I don't want
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  the fans to buy this, not be shit. So anyway, I think just side note, bit of a
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  toaster Swift like, love you moment. I think that's why she's so successful because she does
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  everything for her fans, you know, and she, she cares so much about their experience. Like,
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  remember I put that ticket master saga and the side crash and she was the main thing she was
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  worried about, not probably not from a money perspective, but all of her fans was like my fans
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  won't be able to go to my thoughts or be getting ripped off. Yeah, 100%. And anyway, so this was,
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  this was earlier this year, and now it's come to light that the Nance, which is the one of the
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  largest crypto exchange platform in the world, and they've been investigated this week by the
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  SEC, which is the securities and exchange. Oh, yeah, I remember when people say that in movies,
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  the SEC. Oh, you do not want the SEC on your case. Oh, really? Like, they must get so many
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  investigations, and they'll need to be really, really bad ones. So if you've got the SEC on your case,
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  you are done for your upshots, Craig, yeah, it's all around that they've apparently
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  diverted clients, money to offshore, they've artificially inflated volumes, which means boosted
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  prices, that all this, yeah, all this stuff has got like, why are people so stupid? What's
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  because it's such a new asset class and it's your digital currencies and digital tokens,
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  what are you going to call them? It's so new that there aren't rules and regulations. And that's
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  a whole point is that it's unregulated. So yeah, so they are being investigated. And remember,
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  this was the company that went to buy FTEX, that other exchange platform. And they were like,
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  no, no, no, no, you're dodgy. We're not going to buy you. And then that led to their downfall.
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  And now these guys are being investigated. So there's no one straight in the crypto space.
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  So it's like they're all a bit dodgy. And then we've had another crypto exchange platform,
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  another really large one, Coinbase, which is actually what we've invested in.
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  Oh, yeah. It was about to say just, oh, that sounds familiar. I logged in straight away,
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  and it was like, sorry, like website is down, and I was like, oh my god, they're like, but you're
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  fun to say if I was like, oh gosh, oh my god, so we could lose our money. Well, it's more
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  a case of, if you think about this on a bigger scale, people are reading these headlines that
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  have money in crypto, and they're going, you know what, it's all too hard. Like this is just
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  there's so much uncertainty, there's so many investigations, there's so many lawsuits,
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  I'm just going to pull my money out because I'm scared. So, and then so that, just if you think
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  about that, people pulling their money out, that leads to crisis falling. And that's what we've seen.
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  And we saw a new Bitcoin. So this is just like a run on the Bitcoin. You know how you try and run
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  on the Bitcoin. I mean, it hasn't happened yet, but I think if this goes through and these companies
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  get shut down, get huge fines, or have to increase regulation around their offerings and their
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  their tokens and their currencies, because the whole point of crypto currency is that it's
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  unregulated. Unregulated. So now you've got this regulated coming in saying you can't do this,
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  this, this, this. So don't you think though that this maybe could just be the growing pains of crypto
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  and the sense that since it's a new asset class, and there's quite a lot of, I don't know, I guess,
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  you're right. Sort of space in your face. Also really sweetie right now.
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  The price you pay for recording a podcast on the top right now. Do you think this is almost
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  though, like it could go one of two ways, right? Like crypto could get almost shut down or become
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  a non event. Yeah. Or this is the regulation and the rules that need to be put in place to make it
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  more mainstream and more efficient and more efficient and reliable. Yeah. 100%. And that's why
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  people are like, oh, I want to be some crypto. It's like, just be aware what you'll be seeing,
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  every single very new asset class that is unregulated. And so there's not that protection
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  for investors like there is, if you're visiting through the New York Stock Exchange,
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  into a company that has, you know, officially been, I guess, ticked off by the ECC in terms of
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  it's allowed to give its shares or offer its shares to investors. There's so much more rules and
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  regulations around investing stocks and bonds, right? Then there is around crypto. So yeah,
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  effectively coin based, the other company that's been investigated. So they're both in the same
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  time. They're tokens or their currencies were unregistered securities. So this means that they
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  cannot offer them to the public. Your securities, which is just your, the currency, for example,
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  what you're selling has to be registered. And you have to be registered as a broker in order to sell
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  and trade stocks effectively. So what another example of that be? So I wanted to buy a stock. I
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  had to do it through a broker, yes, essentially. And there've been registers and the stocks are
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  registered securities. So they can legally buy and sell shares on the stock exchange for me.
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  Whereas this is what Coinbase is doing. They are buying and selling tokens or currencies.
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  Cryptocurrencies. Cryptocurrencies. Yeah. And the acting is a broker, but they're not really
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  allowed to. And so you're not allowed to buy and sell to the public unless you're registered.
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  But how on earth have they gotten this point and not registered? Exactly. It's just like wild.
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  Yeah, a whole lot of cowboys. Yeah. So I think there's, there'll be a lot of back of war,
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  there are a lot of news in the media. But I think overall there'll be a lot of people that are like,
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  you know what, it's too hard to ask it. Or ask it. Because I only lay down, then we've only got
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  4,000. Yeah, we'll just leave it. We'll see what happens. But Coin is up 60 percent this year.
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  So it has had a resurgence. That was mainly off the banks. And the rather the banks,
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  and everyone freaking out and being like, you know what I'm going to put in currency and now everyone's
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  going, oh gosh, now digital currencies aren't doing too well. Oh my gosh, you'll just be like,
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  but it hasn't gone down now. It's gone down a little bit. Only a little bit. But it's already
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  off. So it reached $64,000 for one Bitcoin and no one in between one. So it's down to 26,000 now.
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  So it's still, it's falling so far. Right. That's, it's still very, very low people.
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  People are probably almost priced in there. So they're like, you know what, it's cheap.
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  Like us. We'll just leave a little bit in there. You know, like kind of it's fallen so far.
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  It's like that kind of thing. Okay. Anyway, in other news, we had an interest rate announcement in
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  Australia. Oh, Australia. Yeah. We have actually had a, we have. We have a few Australians
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  messages just saying, can you please do like green up chat for like what our laws are in Australia
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  and blah, blah, blah. I was like, we really should be more careful to do the Aussies.
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  So the Australians. Yeah. Well, they're actually are winning in terms of the interest rates.
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  Hikes or the interest rate level. So the interest rates now will be official interest rate.
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  The official cash rate is at 4.1% and we're at 5.5%. Oh, shit. So they really wouldn't it? Yeah,
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  they're really winning. But it was actually a surprise announcement. There wasn't, it wasn't
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  expected. So people were like, you know, a lot, just going to put it on hold. Keep it at the same
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  level. Put it on hold. Sorry. They're just going to keep the interest rate at the same level.
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  Yeah. And then the reserve bank of Australia, which is like the reserve bank in New Zealand,
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  they were like, you know what? No, we're not. We're going to increase it. And sorry,
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  is it increased with decrease down? And so does that mean that interest rates have gone down?
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  Oh. So they've increased, so the reserve bank of Australia. Yeah. When they increase
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  interest rates, effectively all the banks have to follow suit. Yeah. So they've increased at 0.25%
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  so a quarter of a percent. But why is that a good thing? I was like, she saw it.
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  Yeah. We had our friend Ella. We asked her to do BTS because she went inside there.
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  She climbed up the side of the balcony. Yeah. How did they look at all? Did you get some
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  goodness? I've never heard people talk about interest rates in such a beautiful, such a beautiful
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  show. You just come over to the microphone. Yes, because that might not be heard.
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  You've never heard people talk about interest rates in such a quintessentially
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  picturesque Sicilian. We make them so. We make them so. I'm so, I'm so, I'm trying to be
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  interested in it, sir. The interest rates. Anyway, so the reserve bank of Australia has increased
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  interest rates by 0.25% so a quarter of a percent to 4.1% but that is much lower than what we're
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  already at. Their interest rates are at 4.1%, ours are at 5.5. And they're winning because,
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  well, just people with mortgages, they have to pay less. Yeah. Yeah. Because their interest rates
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  are lower. Okay. But they're also seeing a real big impact on their house prices. Like in Sydney,
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  house prices down 8%. But in Auckland, they're down about 13%. So, so everyone's doing shit,
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  but we're doing a bit shitter. Yes. Yeah. Okay. Summary. Yes. Yeah. But this is the highest level
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  that interest rates have been in Australia since 2012. So, a long, long time. Yeah, that's a
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  one I know. Yeah. So, I don't know if we've talked about this before, but in terms of when
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  interest rates announcements are made, whether increasing or decreasing, there is also movements
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  in the currency. So, the currency of New Zealand, the New Zealand dollar will move up and down,
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  the Aussie dollar will move up and down. And so, what we saw in Australia was that the Australian
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  dollar jump, which means it's strengthened, which means more people are demanding the Australian
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  dollar. So, it's like a company. If more people are demanding it, it's sheer price will go up.
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  It's the same with the country. More people are demanding their currency and the currency goes up.
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  Is the currency related to interest rates? Yes. So, in a roundabout way. So, when the Reserve
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  Bank of Australia increased interest rates, the currency increased, but it's all around inflation,
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  because that means that inflation is coming down. Because interest rates is, you know,
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  because when you lower interest rates, it's because inflation is starting to chill out a bit. No.
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  No, when you say opposite, see so. So, when you decrease interest rates,
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  they, and that fuels, if you think about your own situation. Oh, it fuels inflation.
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  Yes. Because it's like, you know what, I can borrow heaps of money, you know, debt's really
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  cheap. Okay. I can spend heaps and I don't have to pay much on my mortgage, so I'm, you know,
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  spend heaps and that fuels inflation. Okay. The opposite, which is what we're seeing now,
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  is interest rates going up, people going, oh, my mortgage rate's going up. I can't really
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  forward march therefore I'm not going to spend the inflation. So, the currency, I just need to
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  reframe when interest rates go up, it's because and oh, okay, okay, okay, hold on. So, when interest rates
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  go up, they, they're trying to stop people from spending money. So, it's harder to borrow money,
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  it's harder to spend money so people start spending less and the reason they do that is to
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  try and curb inflation. Because if people are spending less money and there's less demand,
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  inflation can slowly come down again, right? Where is the opposite? So, if interest rates are
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  starting to get low and low and low, people are like, yeah, I can send heaps. Yeah. I'm going to go
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  borrow heaps and then everybody better and that's when inflation can start to creep up again.
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  The currency, if you've got inflation running ramp, like going crazy and growing super high levels,
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  that's really bad for an economy. Some people are going to be like, we don't want that currency,
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  we're not going to be buying Australian dollars, we're not going to be demanding Australian currency.
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  So, therefore, the currency fall. So, the fact that Australia increased interest rates is a good
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  thing because increased interest rates means lower inflation, which means increased dollar value.
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  Yeah. Oh, yay. Pretty much every country in the world is increasing interest rates at the moment.
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  Yeah. And the great segue into that is Turkey. Turkey is...
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  Are we going to do a podcast there? I mean, it will be a great time.
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  They're just, we were like, a New Zealand, can you just fly us to everywhere that there's news
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  happening in the economy? Yes. We want to be on a rooftop and monaco, and I don't know why
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  is that monaco, but it sounds real fishy. Yeah, monaco sounds real fishy. And Turkey,
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  anyway, can we get back to... Sorry, sorry, sorry. I want to have wrong. So, Turkey is a
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  actually really, really good time, if you want me to travel to Turkey, to be honest. Why?
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  Because their currency is at regular and regular low. So, they've had a re-election of the current
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  government. He's put a whole lot of policies in that aren't that favorable. And one of those was
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  ultra low interest rates, which means that people are going to spend heaps more inflation,
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  it's going to continue to go up, and then their currency is going to probably be going down
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  and not worth a lot. Oh, what you're saying it is? Yeah. So, the reason that's happening,
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  yeah, it's a good time to travel to Turkey is because the dollar is cheap. Yes. Yeah. So, you're
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  way out of the chair. Oh, and instead of buying one mega-reader of the, you might go by two.
• 15:37
  Thank you. So, you're saying things that I need to remember. We should really celebrate,
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  because currency is falling. Is that your bad? It's a bad thing for the economy. Like,
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  Turkey's inflation is 40 per cent. Wow. So, imagine right now, your currency bill's up 40 per cent.
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  Our's up 7 per cent in music. Oh, my God. Like it's... I take back the celebration. It's actually
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  really fucked. It leads to a lot of, like, hardship and everything, but it is, yeah, a good time to
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  purchase Turkish currency because, or travel in five to... That's kind of Turkey, I think it's all
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  in getting out of that. Yeah. The flip side, places like U.S., which is extremely expensive. Yeah.
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  Someone who's here with us at the moment said their friend lives in New York and he went to
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  visit already, where I said it was like $30 for a beer. Yeah. Like, it's just outright...
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  And then you have tax in here. It's just like crazy expensive. So, I mean, some strategy for
• 16:36
  holiday planning, good little budgeting tip is to go with the currencies a lot. That's actually a great
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  idea. But then it can, there can be, like, civil unrest. There might be protests on the street now
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  because people can't afford to eat. There's a lot of, usually, there's a lot of foreign
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  effects. It's not so much. Yeah. Just us holiday. But then I guess we're putting money into
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  that. I was about to say if you go and visit, then you spend quite a bit of money there,
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  hopefully that's a good thing. Yeah. But also, all these currency moves, it's again,
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  coming back to what we were saying at the beginning, why digital currencies have been, especially
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  in countries like Turkey or countries where the financial system is unstable, then digital currencies
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  are important. Yeah. And they don't trust the banking system. You put money in the bank,
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  you might not be there tomorrow, that kind of thing. By reckon I'm on 10 crypto is going to be okay.
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  I think it just needs to. It needs a serious come over. Yeah. It just needs to.
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  Come over? What's the life I'm looking for? That's a huge come. Yeah. I meant more like,
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  it needs to just get in line. It needs to breathe in. It needs so much to go into like an
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  express bank over. Like a naughty child that just like, you know what? You just need to
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  feed a better mind and we won't keep telling you off. You're cute and you can get chocolate if
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  you just do. You know, a few things, but not all things. Yeah. Okay. Yeah. So it's interesting
• 17:53
  to think about. I think they'll come through. I think they will come through. I think they'll
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  make it out. I was just, yeah, I mean, I was doing with a lot of my parents don't know. I'm sorry.
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  I mean, lessons. I know everything that they don't know. Those of us that last night,
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  because we put up a story of me saying I'm up 50 dollars to my name, which is a story for
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  another time, but very broke at the moment. And bless her accountant heart. She messaged us and
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  goes, it sounds like so struggling. Should we pay her really? Please, I mean, I'm absolutely
• 18:28
  struggling. Yeah. So I pay me in Turkish. We had other opinions. All right. Let's go have our long
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  lunch. You never know. Sorry to be of noxious. Ever on the thing that's like, oh, we hate you.
• 18:39
  Winter and Australia and New Zealand. Yeah. Sorry. Thank you so much for listening to the
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  Bye. See you next Tuesday. Well, see you next Tuesday. I mean Monday.