Crypto bulls celebrate latest price run-up with RFK Jr. and take pot shots at Jamie Dimon

By Frances Yue

Sights and scenes from this year's Consensus crypto conference in Austin

Crypto bulls are optimistic as bitcoin inches closer to its all-time high, even as the industry has lost some of its trendy shine to AI.

That was evident at the recent Consensus cryptocurrency conference in Austin, Texas, where 15,000 attendees mocked crypto skeptic Jamie Dimon and celebrated Robert Kennedy Jr., who has embraced the sector in his bid for the presidency.

The attendees, wearing an eclectic mix of shirts, suits and costumes at the Austin Convention Center last week, cheered what they hope is becoming a more friendly regulatory environment in the U.S.

Even though optimism was the reigning vibe at the affair, participants acknowledged that this bull market is different from the 2020-2021 rush. The recent run-up in bitcoin's price (BTCUSD), which surged to a record high of $73,798 in March, has been fueled by institutional participation while lacking in retail engagement.

Read: Bitcoin boosters fear crypto world is getting 'rug pulled' by Congress

Consensus attendees turned out for panels featuring big names ranging from ARK Invest's Cathie Wood to Galaxy Digital's Mike Novogratz. They also lined up to get their books signed by the likes of Andreessen Horowitz's Chris Dixon, CoinDesk's Michael Casey and billionaire Frank McCourt, or to grab popcorn from an exhibition booth run by crypto network Hedera.

Eye-popping stunts were back

Eye-popping stunts returned to Consensus this year, after the crypto collapse of 2022 led to a hiatus from such antics. Dimon, the JPMorgan Chase & Co. (JPM) chief executive who has repeatedly criticized bitcoin, was a particular scapegoat. At the entrance of the convention center, several people hired by UNFK, an organization that supports parody performance art, wore masks impersonating Dimon to make fun of the bank executive.

The scene quickly turned racy. As part of the stunt, a woman dressed in all black, high heels and pantyhose wielded a whip against someone impersonating Dimon. "I am going to go to the JPMorgan Chase headquarters now, and let them all know we need to stop bashing bitcoin," the Dimon impersonator responded.

A JPMorgan Chase representative declined to comment on the stunt.

Inside the conference, attendees scrambled to find seats to watch a session featuring Robert F. Kennedy Jr., the pro-crypto presidential candidate. The crowd burst into applause as he spoke, though he talked more about his skepticism towards vaccines than his views on crypto.

Several attendees said they felt that the overall sentiment at this year's Consensus was much brighter than last year, when crypto was just recovering from a bear market. Still, conference organizer CoinDesk said the number of attendees this year was about the same as last year. Bitcoin fell to a cycle low below $16,000 in November 2022, and traded in the range of $25,000 and $40,000 for most of 2023.

One indicator of the heightened optimism, according to Matt Prusak, chief executive of crypto-mining company Ionic Digital: an uptick in side events at the conference. As cryptocurrency prices have appreciated, venture capitalists have shared the wealth of their investments with crypto startup projects, who could in turn afford to put on more side events, he noted. Crypto companies hosted more than 240 gatherings at Consensus this year, with many of downtown Austin's barbecue restaurants and bars filled with conference attendees in the evenings.

Regulatory changes fuel optimism

Crypto bulls at Consensus had another reason to be hopeful: Recent changes in the regulatory environment could pave ways for more institutions to get involved in the sector.

Last month, the House of Representatives in Washington voted to pass a comprehensive market-structure bill that has the potential to revolutionize the regulation of digital assets in the U.S.

That was coupled with an apparent about-face by the Biden administration on spot ether exchange-traded funds. The Securities and Exchange Commission last month approved an important set of filings for such ETFs, taking a major step toward green-lighting them after a lack of engagement for months.

Still, even the biggest crypto bulls didn't deny that crypto is no longer the trendiest area in the financial and tech markets. Several panels at Consensus focused on how crypto and artificial intelligence could dovetail in the future, while crypto-AI startups are now receiving the most funding from venture capitalists - a development that could be a problem, some have noted.

There is also mounting evidence that retail investors have been missing from the latest rally.

One indication is crypto exchange Coinbase's (COIN) latest earnings. The company reported $56 billion in consumer trading volume in the first quarter of this year, when bitcoin jumped to above $70,000. That was up from $21 billion in the first quarter of 2023 - but still way below the $177 billion in retail trading volume seen in the fourth quarter of 2021, when bitcoin reached its previous all-time high of $68,990.

Meanwhile, Google search trends show that interest in the term "bitcoin" as the cryptocurrency hit its March high was at only half of its peak in 2021.

After all, the environment now is different from 2021. Retail traders are no longer sitting at home most of the day during a global pandemic, while the Federal Reserve is keeping interest rates at a 23-year high instead of infusing trillions of dollars of stimulus into the market.

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"Adoption is increasing while financial institutions are sniffing around, but it is like bringing up a ball back up a hill - we haven't yet quite reached the top where it tumbled," said Konstantin Richter, chief executive and founder of blockchain-infrastructure platform Blockdaemon.

Rebuilding trust with retail investors

Some retail investors were hurt badly in 2022, when a number of major crypto projects and companies collapsed -including the stablecoin TerraUSD (USTUSD), crypto hedge fund Three Arrows, lender BlockFi and, perhaps mostly notably, crypto exchange FTX.

If an investor put their money into one of these assets of platforms expecting returns, but instead lost their life savings, they are likely to be "very dubious coming back," said Rob Hadick, general partner at crypto venture-capital firm Dragonfly. "I think it takes time to rebuild trust. Just a little bit of price action itself does not get us there."

Meanwhile, a significant amount of retail money continues to be locked up in bankruptcy proceedings of such failed crypto companies.

Some crypto investors had the right investment thesis but were not on the right platforms, noted Mauricio Di Bartolomeo, co-founder of crypto lending platform Ledn. As the crypto space gradually matures, it is possible that they could return to the crypto market after getting their funds back, Di Bartolomeo said in an interview.

The FTX bankruptcy estate, for example, has said it would return money to most of its customers.

Another hindrance for retail investors is the macroeconomic environment, with interest rates standing at a 23-year high and inflation remaining heated.

"There's only that much liquidity in the market right now," according to Blockdaemon's Richter. "People are still struggling and you can't borrow money, you can't easily sell your house and assets are pretty tied up. So I think that's going to take another year."

Several market participants said they're looking forward to the end of this year and early next year for crypto to trade meaningfully higher and peak in the current cycle. In the view of crypto bulls, retail investors will eventually return once the Fed begins cutting interest rates and after the U.S. presidential election in November brings more regulatory clarity.

Steven McClurg, head of U.S. asset management at CoinShares, said he expects bitcoin to reach as high as $150,000 by the end of this year.

-Frances Yue

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06-08-24 0830ET

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