Gemini shares sink after reporting wider-than-expected loss in Q3: CNBC Crypto World

Today, cryptocurrencies are in the red

as lawmakers on Capitol Hill move closer

to reopening the government. Shares of

Gemini sink after the company reported

weaker than expected third quarter

earnings. And Alexander Bloom of Two

Prime discusses what he's watching in

the crypto market through 2025 and

beyond.

Welcome to CNBC's Crypto World. I'm

Jordan Smith. Major cryptocurrencies in

the red after rallying yesterday on

hopes that the record- setting US

government shutdown could be nearing an

end. As of noon Eastern, Bitcoin dropped

to the $13,000 level. Ether fell by 1

and a4% and Salana's soul token dropped

by more than 3%. The moves lower came

even after the Senate yesterday evening

passed a bill to end their government

shutdown, sending it to the House. The

negotiated deal does not include an

extension to the Affordable Care Act

subsidies, a key demand from Democrats,

and instead calls for a vote on the

credits in December. Also, a new report

out from ADP this morning showed the

four-week moving average of private

sector job creation was down more than

11,000 on average per week as of October

25th, signaling more weakness in the

labor market. Taking a quick look at a

crypto-related stock, CleanSpark shares

fell 7 and a half% as of around 1 p.m.

Eastern after the Bitcoin miner

increased its convertible note offering

to 1.15 billion. The move is part of a

broader trend among miners and AI

focused data infrastructure firms moving

more into the debt markets for capital.

All right, let's talk about the top

stories. Gemini shares slumping this

morning after the Wlvoss twins crypto

exchange reported a wider thanex

expected loss of $6.67 per share in Q3

yesterday. Analysts were looking for a

loss of $324.

Q3 marked the company's first quarter as

a publicly traded company as Gemini went

public in September. IPO related costs

contributed to a $159.5 million net loss

in Q3, even as revenue doubled from the

year before. Gemini shares plummeted

more than 15 12% as of around 12:30 this

afternoon. Next, Coinbase is launching a

platform to let issuers distribute new

crypto tokens. The company said in a

press release yesterday that its goal is

to create a balanced and transparent

token sales platform for both issuers

and users. The platform will use

algorithms to promote broader

distribution of token sales while

limiting large purchasers. It also will

prioritize quote true supporters first

by penalizing users who sell their

tokens less than 30 days after listing.

Coinbase is looking to differentiate

itself from the ICO boom in 2018 which

saw a wave of fundraising off of new

tokens before the market eventually

corrected. As of 12:30 Eastern, Coinbase

shares were trading lower by more than

2%. Last, SoFi is debuting crypto

trading on its platform. And this

morning, the bank CEO Anthony Notto

joined CNBC Squawkbox to discuss the

launch. We've wanted to be a one-stop

shop for all your financial services

needs. And one of the holes we've had

for the last 2 years was in

cryptocurrency, the ability to buy,

sell, and hold crypto. Uh we were not

allowed to do that as a bank. It was not

permissible. But in March of this year,

the OC came out with an interpretive

letter that it's now permissible for

banks like SoFi to offer uh

cryptocurrencies. So this morning, we're

launching as the only national bank, the

first and only national bank, the

opportunity to buy, sell, and hold

cryptocurrencies like Bitcoin, Ethereum,

and Solano. Notto told CNBC the bank

will eventually expand well beyond three

cryptocurrencies. He also explained the

difference between crypto trading on

SoFi versus an exchange like Coinbase or

platforms like Robin Hood. There's a

couple of really big differences. First,

we're a nationally chartered bank, which

means we have the infrastructure, the

processes, the financial conditions that

provides the safeguards that a consumer

would expect from a bank. Um, which is

going to allow us to scale responsibly.

Uh, the second thing is because we are a

one-stop shop, you can do all your

banking, checking and savings at SoFi,

your borrowing and your investing and

now crypto. And one of the unique things

about that is when you come to SoFi and

fund your crypto investments, you'll

fund them in a SoFi checking and savings

account. that check and savings accounts

deposits earn interest. Notto also said

this morning that he believes blockchain

and cryptocurrencies are quote super

cycle technologies just like AI and will

be pervasive across the entire financial

system. He went on to say that stable

coins will fundamentally change payments

and SoFi aims to launch a stable coin in

January which will be backed dollar for

dollar by reserves. Notto explained that

because SoFi is a bank, the dollars will

be put in its Fed bank account which

means there's no liquidity or credit

risks and will earn Fed funds. All

right, for our main story, I spoke with

Alexander Bloom, the CEO of Twime, about

the state of the crypto market as we

start to look ahead to 2026. He

discusses whether Bitcoin could reach

new highs by year end and what catalysts

investors should watch next year.

So, it's that time of year when we start

looking ahead to the next year and we

start thinking about the themes and

potential catalysts for the year ahead.

I want to get there, but just to start

this conversation, let's let's talk

about ending 2025. We're coming off this

government shutdown, potentially ending

this government shutdown. Um, we see

Bitcoin and other cryptocurrencies

struggling to make real gains. October

kind of turned out to be a bit of a

bust. Um, I I guess all of that to say,

what are your expectations for the end

of the year? Because we we've had people

like Michael Sailor on who believe

Bitcoin can reach 150K before the end of

the year. Um, but is the momentum there

to drive prices like that before

December 31st?

>> Yes. So, I think a lot of people had

been anchored in this expectation we're

in a four-year cycle. And I think that's

starting to prove out that that's not

the case. Uh, you know, the market has

really changed. Our institutional

clients and buyers of Black Rockck ETFs

or public companies we work with, they

they don't care about if there's a

four-year cycle or not. They're

interested in cash flows and ways to buy

more Bitcoin whenever they can. I would

say there's been an enormous amount of

headwinds uh for the asset in general,

limited liquidity and some political and

economic instability that all look to me

like they're going to resolve to the

upside. And so considering all the

difficulties that have been in place, uh

I think that there's been actually

strong resilience in the asset amidst a

lot of um uncertainty and I think we're

poised for a strong end to the year and

a strong 2026.

>> Let's talk about the four-year cycle as

we look ahead into 2026. In May, it'll

be four years since the collapse of

three airs capital and then in November,

a year from now, um we'll be talking

about four years since the collapse of

FTX. You just said that you think that

the four-year cycle is going away. C can

you talk about why you see that changing

and sort of I guess what is the dynamic

for for Bitcoin going forward?

>> Sure. So, I think the main driver of the

four-year cycle historically has been

the having of Bitcoin where the supply

being added into the market is cut in

half drastically and then this supply

squeeze uh and even equivalent demand

leads to higher prices. Uh that ratio

has become so insignificant in terms of

new supply entering versus existing that

it doesn't really have much of an impact

anymore. Uh, aside this, you know, the

last couple years have been the first

time where we've had higher interest

rates and tightening liquidity

conditions. Um, and so groups that are

used to, you know, endless bitcoin and

uh, endless money entering the market

have been more constrained. However, I

think we have now entered into a rate

cutting cycle. I expect we'll have a

dovish new Fed chair coming next year.

And I know for us and the way we trade,

uh, though we've seen volatility

diminish as we're as we're trading, we

expect that to continue upwards as well.

And so, uh, again, I think that kind of

composition of the types of people

buying Bitcoin now are very different

and not as anchored to this four-year

cycle. And I think the last remaining

effect for it is, um, people just

psychologically believing in it. Um, but

beyond that, there's no reason it should

continue.

Is there anything that sort of I guess

keeps you up at night when it's where

we're talking about the path ahead for

2026? Because you know this past year

was filled with a lot of catalysts. Some

of the ones that you just mentioned um

there was regulation, there was also the

rate cutting cycle that began, but there

were also some headwinds like trade and

economic uncertainty that created

volatility. What do you think the

factors are as we move into the new

year? because you know even as the Fed

is cutting rates they're they're not

going to go as low as they were in the

last cycle before they started raising

them.

>> Yes. Uh I would say the two main things

are geopolitical and economic

instability. if there is a major war or

things escalate with Russia, I mean any

kind of instability I think is difficult

for risk assets and then I would say

just if there's you know coupled with

that uh if the entire economy collapses

or there's a big break in mortgages or

you know something catastrophic happens

that's obviously going to affect

everything you know especially because

Bitcoin's 247 it is a place people go to

for liquidity especially on weekends or

off hours and so it's usually hit first

and hit hardest. Um that being said, I

think that um a lot of the we've just

printed so much money over the last uh

five six years. I think 50% of all the

M2 money supply in the world was created

in the last five years that that money

just has to go somewhere and I think

it's elevated all assets um real estate,

stocks, bitcoin and other

cryptocurrencies as well. Uh another

thing I think specific to the digital

asset or bitcoin industry is some kind

of systemic risk. you mentioned 3

Capital and uh BlockFi, all these groups

that blew up because they effectively

lending to each other in risky ways and

didn't have proper risk management. Uh

we're one of the largest Bitcoin backed

lenders in the world and I think groups

like us have learned from those mistakes

of the past. We're not rehypothecating

Bitcoin. We're not trading Bitcoin to

make an extra spread. And so some of

those systemic factors uh no longer I

don't think are as salient. And then

lastly, if you look at the total

leverage in the lending market today,

it's it's about equal to the peak of

what occurred in the 2122 cycle, but the

market cap of all digital assets is

about double. So it tells me that

there's much more space for additional

leverage in the market before we ran

into issues before which largely stem

from poor risk management and can be

managed away anyway. And so uh taking

together as long as there's not some

unpredictable war or a major breaking in

the economy, I I'm pretty bullish for

the year to come. Yeah, as you

mentioned, I mean, there were so many

lessons learned from the last cycle

that, you know, many businesses have

come out of the crypto winter that that

followed that that have learned those

lessons and grown their businesses in

entirely new ways that don't have the

same risks. I've asked you about the

negative. Now, I want to end on the

positive. What are what are some of the

positive catalysts that you're watching

in 2026 broadly if you had to recap them

for the year ahead?

>> So, one is just regulatory. You know,

there's greater clarity for the industry

as a whole. uh you know I've been

working in this industry for 12 years

and for the first about 11 of them you

never know if you're on the right side

of things even if you're running a

regulated business like we do and so

there's a lot of comfort both for us in

that and also for more institutional

investors to create B products offer it

to their clients you know I think Schwab

is saying in the first half of next year

they're going to offer this to their

offer Bitcoin buying in in accounts to

their retail clients you saw JP Morgan

is offer starting to offer loans against

Bitcoin very soon and So all of these

things um I think are in favor of

Bitcoin just because there's a safer

regulatory environment. Uh to your

point, yes, rates I don't think will

come down as low as they were during the

um COVID era. However, um they are

coming down on a relative basis. You

know, whe whether it goes down from 1%

to 75 bips or from 4% down to 3 375

bips, it's still increasing liquidity.

Uh and so I think that's very strong.

And then I think the proliferation of

stable coins is going to just bring more

adoption of all assets within the

digital assets ecosystem. Um and then

there's just great companies. There's

more sophisticated products. You know,

we don't just offer vanilla loans. We

offer different kinds of structures

callers on those loans, reduced margin

calls. And so I think we'll see

increasingly sophisticated structure

products. On the trading side, we offer

Bitcoin based yield. And I think there

too there's so much competition within

the Bitcoin treasury space within the

public companies that are trying to

differentiate themselves from just a

simple Bitcoin proxy that um new kinds

of products and more sophistication of

the products will bring in new clients

and allow existing ones to garner more

investment as well.

>> All right, that's all for Crypto World

today. We're back again tomorrow and

we'll see you then.

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