# Intel Shares Plunge After Outlook Hit by PC Slump, Supply

An episode of [Bloomberg Intelligence](https://invisiblenetwork.ai/podcast/326301337), 30 Oct 2026, 22 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/7f534b8c-9e91-429a-b102-ae3c00090c6d/d4cfb4e3-4b2b-450a-820a-b4f30119255d/audio.mp3?utm_source=Podcast&in_playlist=0ad812bf-fd15-4012-a18c-ae3c00090c76

Watch Paul and Scarlet LIVE every day on YouTube: http://bit.ly/3vTiACF. Bloomberg Intelligence hosted by Paul Sweeney and Scarlet Fu -Kunjan Sobhani, Bloomberg Intelligence Senior Semiconductor Analyst, discusses Intel’s shares plummeting after its revenue forecast missed analysts' estimates. The company was hurt by sputtering demand for PC processors and supply-chain problems with its data center components. Intel projects sales in the fourth quarter will be $15 billion to $16 billion, with profit of 25 cents a share, excluding certain items, which is lower than analysts' average estimates. -Poonam Goyal, Senior U.S. E-Commerce and Retail Analyst at Bloomberg Intelligence, discusses Amazon earnings. Amazon.com Inc. shares dropped after the company reported greater capital spending than anticipated and the slowest growth in the core e-commerce business in three years. Revenue at the cloud unit, Amazon Web Services, accelerated for the sixth straight quarter, while online sales gained just 2% to $68.5 billion, the lowest increase since early 2023. -Vincent Piazza, Bloomberg Intelligence Senior Equity Research Analyst, Oil & Gas, discusses earnings from Chevron and Exxon Mobil. ExxonMobil and Chevron beat profit expectations due to conflicts in the Persian Gulf and Russia driving refining results to record highs. The disruptions to global energy markets show little sign of easing, with price volatility forecast to escalate as strategic and commercial stockpiles run low. -Emily Nicolle, Bloomberg Digital Finance Reporter, discusses Bitcoin sinking below $77,000 for the first time in more than a month after Binance Holdings revealed a record hack. The breach, in which attackers siphoned off over $6 billion, is the largest crypto theft on record and raises questions about the security of customer assets. Binance has reserved $6.34 billion of company funds in the wake of the incident, and an analyst said that Binance can absorb the losses. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios.
[0:04] Speaker 2: Podcasts. Radio.
[0:06] Speaker 3: News.
[0:09] Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
[0:13] Speaker 1: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
[0:16] Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
[0:19] Speaker 1: you get your podcasts or watch us live on YouTube.
[0:24] Speaker 4: I want to dig into Intel a little bit more
[0:26] Speaker 4: because you look at that move today, down 28%. This is,
[0:30] Speaker 4: of course, after we saw Alphabet lose about a quarter
[0:34] Speaker 4: of its value as well due to disappointing earnings. Kunjan
[0:38] Speaker 4: Sorbani is Bloomberg Intelligence's senior semiconductor analyst, and he joins
[0:43] Speaker 4: us now from San Francisco. And this is not good news,
[0:46] Speaker 4: especially when you consider, Kunjan, that the U.S. government, that
[0:50] Speaker 4: is taxpayers, owns a big chunk of Intel as well.
[0:54] Speaker 3: Yeah, I mean, look, there was a lot of surprises
[0:56] Speaker 3: on the negative side. You know, we didn't expect, most
[0:59] Speaker 3: people are aware PC market does not have like strong tailwinds,
[1:02] Speaker 3: but we didn't expect this kind of a weakness, which
[1:05] Speaker 3: is really hurting them because even as of last quarter,
[1:08] Speaker 3: PC remains the largest revenue segment for the company. And remember,
[1:11] Speaker 3: it's also the highest gross margin, one of the highest
[1:14] Speaker 3: gross margin segments. So any revenue loss there really impacts
[1:19] Speaker 3: the top line as well as the gross margin. The
[1:22] Speaker 3: only sort of good news is that their server CPU
[1:24] Speaker 3: demand continues to stay strong. But however, again, the supply
[1:28] Speaker 3: constraints on the wafer side, on the substrate strides are
[1:32] Speaker 3: really limiting on how much they can ship. So there's
[1:35] Speaker 3: not enough offset coming from data center or not enough
[1:38] Speaker 3: goodness coming from data center to offset all the weakness
[1:41] Speaker 3: in the PCs.
[1:42] Speaker 5: What's going on with the PC market? What's the drivers there?
[1:46] Speaker 3: Yeah, I mean, so we are all aware about the
[1:48] Speaker 3: memory crunch happening, right? So what's happening is most of
[1:51] Speaker 3: the memory players are allocating their capacity towards the better ASV,
[1:57] Speaker 3: better margin, high growth data center market. So that takes
[2:00] Speaker 3: away capacity from the PC side. Plus, memory prices in
[2:04] Speaker 3: general have just skyrocketed, almost doubled in the 18 months
[2:07] Speaker 3: and are expected to grow at least on the low
[2:10] Speaker 3: level 50%. Some are claiming 70% to 80% next year. So,
[2:14] Speaker 3: you know, PC are a very consumer company. exposed markets.
[2:18] Speaker 3: So there's a lot of price sensitivity there. So the
[2:20] Speaker 3: combination of memory prices being so high makes the bomb,
[2:25] Speaker 3: the bill of materials to build a PC higher, plus
[2:28] Speaker 3: memory makers allocating supply away from PCs. The end result
[2:31] Speaker 3: of all of that is PC makers don't want to
[2:35] Speaker 3: build up inventory. They are worried about it and they
[2:38] Speaker 3: can't push down these prices to consumers because that also
[2:41] Speaker 3: impacts the demand.
[2:43] Speaker 4: Intel, of course, has been trying to move into the
[2:46] Speaker 4: AI business as well, and it has a data center
[2:48] Speaker 4: and AI unit. How did it do there?
[2:52] Speaker 3: That was a segment they did really good. They beat
[2:56] Speaker 3: through the estimates and they've also guided it forward pretty well.
[3:01] Speaker 3: More importantly, despite the PC headwinds, they're still guiding the
[3:05] Speaker 3: company to grow, the total revenues to grow in 2027.
[3:08] Speaker 3: And we believe that is mostly coming from the goodness
[3:11] Speaker 3: in DCAI, which is the data center AI business.
[3:15] Speaker 5: Kunjan, that doesn't sound like there's an easy fix here.
[3:17] Speaker 5: It just seems like maybe it's just time.
[3:19] Speaker 6: Is that where we are?
[3:21] Speaker 3: It is, but I think the reaction you're seeing is
[3:23] Speaker 3: a driver of a couple of things. Look, we have
[3:25] Speaker 3: seen this sort of stumble towards the goal line a
[3:28] Speaker 3: couple of times with Intel. It took them almost four
[3:31] Speaker 3: quarters to get the gross margin going to the levels
[3:34] Speaker 3: that they were in 3Q. And now again, the gross
[3:37] Speaker 3: margins that they're guiding down to almost 500 basis points
[3:40] Speaker 3: per below the street in 4Q. This is like you're
[3:44] Speaker 3: back to last year, right? So we have seen these
[3:46] Speaker 3: tumble in the same stories a couple of times again.
[3:49] Speaker 3: And I think that is where investors are really getting impatient.
[3:53] Speaker 2: Stay with us.
[3:54] Speaker 6: More from Bloomberg Intelligence coming up after this.
[4:00] Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
[4:04] Speaker 1: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
[4:07] Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
[4:10] Speaker 1: you get your podcasts or watch us live on YouTube.
[4:15] Speaker 5: Amazon shares down about two and a half percent here
[4:17] Speaker 5: today after the company reported greater capital spending than anticipated
[4:22] Speaker 5: and the slowest growth in the core e-commerce business in
[4:26] Speaker 5: three years. Let's break it down a little bit more
[4:27] Speaker 5: with Poonam Goyal, senior U.S. e-commerce and retail analyst at
[4:31] Speaker 5: Bloomberg Intelligence. Poonam, what did you take away from the
[4:34] Speaker 5: Amazon results here?
[4:35] Speaker 7: Yeah, so look, the print looks like things have slowed,
[4:38] Speaker 7: but they really haven't. If you were to look at
[4:40] Speaker 7: 2Q and 3Q collectively, because you do need to take
[4:43] Speaker 7: into account the Prime Day shift, which moved the event
[4:47] Speaker 7: into 2Q from 3Q, things are very healthy. In fact,
[4:50] Speaker 7: I think the e-commerce business is growing very nicely and
[4:53] Speaker 7: continues to show share gains. Where it's most impressive is
[4:57] Speaker 7: on grocery. Now, this is a segment that Walmart, we
[5:00] Speaker 7: would say, has traditionally underperformed, but has been making a
[5:04] Speaker 7: lot of headway to really increase frequency here. And when
[5:08] Speaker 7: you do shop for grocery, you spend two times more
[5:11] Speaker 7: on adjacent other categories.
[5:14] Speaker 4: You look at the Amazon Web Services business, the cloud business,
[5:18] Speaker 4: and that's picked up this year. And normally, I think
[5:22] Speaker 4: that's something investors would really focus on and reward the
[5:26] Speaker 4: stock for. Yet, what does it say about the environment
[5:29] Speaker 4: that they reacted instead to the core e-commerce business?
[5:34] Speaker 2: Sure.
[5:34] Speaker 7: So I think why the shares are down today is
[5:37] Speaker 7: less to do with the artificial slowdown we see in
[5:40] Speaker 7: e-commerce and the strength that we see in cloud services.
[5:43] Speaker 7: It's really to do with the rising CapEx that we
[5:45] Speaker 7: will see next year and in future years to make
[5:48] Speaker 7: room for investments in the cloud business. That's yielding in
[5:52] Speaker 7: cash flow being down. And when free cash flow is negative,
[5:56] Speaker 7: we think it'll continue to stay suppressed because CapEx will
[5:59] Speaker 7: continue to rise. That's the real issue and why the
[6:01] Speaker 7: shares are trading off.
[6:04] Speaker 5: So I am looking at consensus kind of free cash
[6:06] Speaker 5: flow numbers negative for this calendar year 26, negative by
[6:10] Speaker 5: another $ 34 billion next year, and maybe being free cash
[6:14] Speaker 5: flow positive in 2028. Does that seem kind of like
[6:18] Speaker 5: the cadence the company's suggesting?
[6:21] Speaker 7: I think we'll have to see where CapEx comes in, right?
[6:24] Speaker 7: $ 220 billion for 2026. They said it will be higher
[6:28] Speaker 7: for next year, and we expect it to continue to
[6:31] Speaker 7: be higher. So at that rate, you know, you could
[6:34] Speaker 7: argue that free cash flow could stay suppressed. But it
[6:37] Speaker 7: all depends on, Paul, does it go from $ 220 billion?
[6:40] Speaker 7: to 230 or does it go to 250 or does
[6:42] Speaker 7: it go to 300, right? We're not sure where the
[6:44] Speaker 7: number will come in.
[6:44] Speaker 5: Yeah, I'm just looking at the consensus on the FA function,
[6:47] Speaker 5: 220 billion in CapEx this year and 26 going to
[6:50] Speaker 5: 290 billion. next year, and almost 330 in 2028. So
[6:56] Speaker 5: the street's kind of focusing on, these guys are going
[6:59] Speaker 5: to be spending for a while.
[7:00] Speaker 2: Yeah.
[7:00] Speaker 4: And the company did not commit to any kind of number.
[7:03] Speaker 4: They just said it would increase meaningfully in 2027. So
[7:07] Speaker 4: you can interpret that however you want. What does that mean, Poonam,
[7:10] Speaker 4: in terms of how Amazon is going to raise more capital?
[7:14] Speaker 4: Is it going to do so through a stock sale,
[7:16] Speaker 4: through selling bonds?
[7:18] Speaker 7: It could be either. It could be through equity issuance
[7:21] Speaker 7: or through the bonds. They haven't clearly stated what the
[7:24] Speaker 7: intent will be. I think we have seen other tech
[7:27] Speaker 7: companies do the same as CapEx has clearly risen. So
[7:31] Speaker 7: it's definitely something that they will be looking into, we think.
[7:36] Speaker 5: All right. So here we are about to flip the
[7:38] Speaker 5: calendar to November. What's the feeling from all the retailers
[7:42] Speaker 5: you talked to, Poonam, about holiday season? What's the expectation
[7:47] Speaker 5: for the the health of that season.
[7:49] Speaker 2: Yeah.
[7:50] Speaker 7: So, so holiday is going to be strong, you know,
[7:53] Speaker 7: irrespective of everything that we're hearing about inflation, gas prices,
[7:57] Speaker 7: et cetera, consumers are still looking to spend. The industry
[8:01] Speaker 7: outlook is for a roughly over a 6% gain online
[8:05] Speaker 7: and online sales for the holiday season. We think Amazon's
[8:08] Speaker 7: going to grow faster than that. So Amazon is going
[8:10] Speaker 7: to be taking share of, It's going to be about
[8:13] Speaker 7: where do you want to spend? Where do you want
[8:15] Speaker 7: to stretch your dollars? Who's going to get your dollars?
[8:17] Speaker 7: Consumers will buy, but do they buy at Amazon or
[8:19] Speaker 7: do they buy at Walmart?
[8:20] Speaker 2: That's the key question.
[8:21] Speaker 7: We think they buy at both and the middle gets
[8:24] Speaker 7: squeezed again.
[8:26] Speaker 4: It goes back to how if you're organized and you
[8:28] Speaker 4: actually buy things during Prime Day for the holidays, you
[8:31] Speaker 4: can get that out of the way.
[8:33] Speaker 6: Like you, like you were. No, I wasn't at all.
[8:35] Speaker 4: I don't do that at all. How much has Amazon
[8:38] Speaker 4: trained the consumer to do just that, Poonam?
[8:41] Speaker 7: You know, The thing is, Amazon has trained the consumer
[8:44] Speaker 7: to look for deals over Prime Day, over Black Friday,
[8:46] Speaker 7: over Cyber Monday. We know those days are going to
[8:49] Speaker 7: have the greatest discount. But the question is, when you
[8:52] Speaker 7: see something on sale, do you want to wait until
[8:54] Speaker 7: Black Friday or Cyber Monday to get it? And do
[8:57] Speaker 7: you have your list really fully together at Prime Day
[9:00] Speaker 7: and Black Friday? So there will continuously be a flow
[9:03] Speaker 7: of purchasing, but those deal-driven days will definitely have higher volume.
[9:08] Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this.
[9:15] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[9:19] Speaker 1: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
[9:22] Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
[9:26] Speaker 1: you get your podcasts or watch us live on YouTube.
[9:30] Speaker 5: Again, I'm going to go down to Baton Rouge, Galveston.
[9:33] Speaker 5: I'm going to build myself a refinery because those people
[9:35] Speaker 5: are making money hand over fist. Big oil reaped more
[9:39] Speaker 5: than $ 50 billion in windfall profits as conflicts in the
[9:42] Speaker 5: Persian Gulf and Russia drove refining results to record highs.
[9:46] Speaker 5: It's a good time to be an oil analyst. It's
[9:48] Speaker 5: a good time to talk to Vince Piazza. He's a
[9:50] Speaker 5: senior equity analyst at Bloomberg Intelligence covering all the oil
[9:53] Speaker 5: and gas names, which he's done for decades. He knows
[9:55] Speaker 5: all these players. He's seen all the cycles come and go.
[9:58] Speaker 5: Talk to us about some of the earnings. you're seeing here, Vince,
[10:01] Speaker 5: coming out of the big oil companies you follow.
[10:04] Speaker 8: Yeah, you know, the refining side once again coming through
[10:08] Speaker 8: for both Exxon and Chevron for both, you know, utilization
[10:14] Speaker 8: very strong, throughput very, very strong, the spreads extremely strong.
[10:19] Speaker 8: So we're coming close to that part of the cycle
[10:22] Speaker 8: where you ask yourself, how much can things get better?
[10:26] Speaker 8: You have WTI 104, Brent 117 today, both Exxon and Chevron.
[10:33] Speaker 2: Hitting new highs.
[10:35] Speaker 8: Valuations approaching the upper bound of the last five years.
[10:41] Speaker 8: So you ask yourself, does it feel like you're close
[10:45] Speaker 8: to a peak? If we have benchmarks that continue down
[10:50] Speaker 8: this path over 100 bucks, You could see a lift
[10:54] Speaker 8: in 4Q earnings.
[10:56] Speaker 2: But how do things get better from here? Hard to say.
[11:01] Speaker 8: So if you're an investor in these names and you're
[11:03] Speaker 8: reading the tea leaves aside from war.
[11:08] Speaker 2: Where would the benchmark be?
[11:10] Speaker 8: So I think as I scrub the models for 2027,
[11:15] Speaker 8: I'm starting to get a little bit more cautious with
[11:18] Speaker 8: respect to the earnings cadence from here, aside from any
[11:22] Speaker 8: kind of benefits of 4Q. The one thing I would say, Paul,
[11:27] Speaker 8: is that these guys are throwing off a boatload of
[11:30] Speaker 8: free cash flow. $ 19 billion this quarter alone for Exxon.
[11:36] Speaker 2: Net debt is down significantly. The cash is up.
[11:40] Speaker 8: So you wonder what happens for 2027 if share buybacks
[11:44] Speaker 8: are going to be held relatively flat. That's a lot
[11:47] Speaker 8: of firepower to go into a year of uncertainty.
[11:50] Speaker 4: So that brings me to my next question. What do
[11:53] Speaker 4: they do with all that cash? I mean, share buybacks
[11:55] Speaker 4: is kind of an obvious answer. Of course, these are
[11:57] Speaker 4: dividend paying companies, but how else do they deploy it?
[12:03] Speaker 8: So Exxon and Chevron have acquired in the past. You know,
[12:07] Speaker 8: Chevron is digesting Hess after a bruising battle with Exxon. Exxon,
[12:14] Speaker 8: of course, bought Pioneer in the Permian. As you think
[12:18] Speaker 8: about the next growth cycle, what happens as you push
[12:21] Speaker 8: past 2027 and 2028? Is there more LNG to invest in?
[12:26] Speaker 2: Are there other companies here in the U.S.
[12:29] Speaker 8: to a purchase, just given that the relative multiple advantage
[12:34] Speaker 8: and the cash hoard that they have.
[12:36] Speaker 2: You mentioned the dividends.
[12:38] Speaker 8: Yes, they do pay modest dividends, so you could see
[12:41] Speaker 8: some upside there if trends do continue. Again, Exxon held
[12:46] Speaker 8: its share of purchases relatively flat for 2027, so there's
[12:50] Speaker 8: a lot of firepower there for both not only inorganic growth,
[12:54] Speaker 8: via M & A, but also organic growth as well,
[12:58] Speaker 8: as it has other projects it can invest in in
[13:01] Speaker 8: Guyana and elsewhere.
[13:02] Speaker 5: Hey, Vince, we're hearing from over the last month or
[13:05] Speaker 5: two from the Trump administration and from some third party
[13:09] Speaker 5: observers that, you know, quite a lot of oil is
[13:11] Speaker 5: getting through this trade of Hormuz here. If so, why
[13:15] Speaker 5: is Brent at $ 117 a barrel?
[13:18] Speaker 2: Yeah, that's what I'm questioning as well, right?
[13:20] Speaker 8: Because the reality on the ground is things are getting
[13:24] Speaker 8: closer to a more normal cadence through the Hormuz.
[13:31] Speaker 2: But there's also the geopolitical risk of collapse.
[13:35] Speaker 8: Potential strikes after the midterms and what that could mean
[13:39] Speaker 8: for global balances as well. So I think there's a
[13:43] Speaker 8: lot of uncertainty there. And that's why you're seeing the
[13:46] Speaker 8: geopolitical risk premium remain in WTI and also Brent. And
[13:52] Speaker 8: that's why you're seeing these names still have some life
[13:55] Speaker 8: to them as we get closer to the end of
[13:57] Speaker 8: this cycle.
[13:58] Speaker 4: How do you think about the midterm elections and the
[14:00] Speaker 4: risks of a Democratic controlled Congress? What does that mean for?
[14:06] Speaker 8: Well, yeah, I guess it's more of a drumbeat with
[14:09] Speaker 8: respect to a windfall profits and the the excess cost
[14:17] Speaker 8: at the pump for a lot of consumers with these
[14:19] Speaker 8: high prices. The only thing is the refiners are really
[14:21] Speaker 8: going full out. It's not like they're holding back utilization
[14:25] Speaker 8: on the refining side. So they are maxing out. So
[14:30] Speaker 8: that's not the issue. And I think there's going to
[14:32] Speaker 8: be a little bit of uncertainty post and midterms, but
[14:35] Speaker 8: a lot of it is wait and see. And that's
[14:37] Speaker 8: why there is a great deal of uncertainty and volatility
[14:39] Speaker 8: in the overall commodity space for the energy markets.
[14:43] Speaker 5: So as you well know, Vince, I'm an astute viewer
[14:46] Speaker 5: of Landman. I know all things about the energy business,
[14:49] Speaker 5: the oil and gas business here. West Texas doesn't necessarily
[14:53] Speaker 5: like WTI over $ 100 a barrel because that might be
[14:56] Speaker 5: some demand destruction here.
[14:59] Speaker 6: Are we seeing that at all?
[15:01] Speaker 2: Well, you know what?
[15:02] Speaker 8: I think comments from, I think it was BP or
[15:05] Speaker 8: Shell earlier said they are seeing some demand destruction. Look,
[15:09] Speaker 8: $ 100 crude does no one any good because it does
[15:13] Speaker 8: reduce demand. As I think we've talked about in the past, Paul,
[15:17] Speaker 8: you know, $ 100 is right at that level of demand destruction.
[15:23] Speaker 8: $ 60 is no good for the industry. That $ 75 to
[15:27] Speaker 8: $ 80 is that sweet spot where everyone feels that there's
[15:31] Speaker 8: enough profitability and return on that investment and the consumer
[15:35] Speaker 8: isn't hijacked at the pump. We're not there yet. And,
[15:40] Speaker 8: you know, quite frankly, I thought we were going to
[15:42] Speaker 8: get there with tensions being ratcheted down some. But in
[15:47] Speaker 8: the last month or so, we've seen these marks scream
[15:52] Speaker 8: off the terminal here. And that's really a function of
[15:57] Speaker 8: the ratcheted up of tensions as we get closer to
[16:00] Speaker 8: the midterms and after the midterms as well.
[16:03] Speaker 2: Stay with us.
[16:04] Speaker 6: More from Bloomberg Intelligence coming up after this.
[16:10] Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
[16:14] Speaker 1: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
[16:17] Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
[16:20] Speaker 1: you get your podcasts or watch us live on YouTube.
[16:25] Speaker 4: So I look at what's happening in markets, and once
[16:28] Speaker 4: upon a time, Bitcoin was kind of seen as an
[16:30] Speaker 4: uncorrelated asset, something that you could put money into and
[16:35] Speaker 4: find that it would survive downturns in other assets like stocks.
[16:39] Speaker 4: That's no longer the case, it feels like, because when
[16:42] Speaker 4: it's not being stolen by North Koreans.
[16:45] Speaker 6: It trades like crazy. A risky asset.
[16:47] Speaker 3: A risky asset, yeah.
[16:48] Speaker 4: But it's the being stolen by North Koreans part that
[16:50] Speaker 4: I want to focus on because another incident of a hack,
[16:54] Speaker 4: this time into Binance, is shaking the foundations of crypto.
[16:57] Speaker 4: Emily Nicole is our Bloomberg Digital Finance reporter joining us
[17:00] Speaker 4: from London. Emily, what can you tell us about this
[17:04] Speaker 4: Binance hack as we see Bitcoin drop below $ 77, 000 right now,
[17:07] Speaker 4: down 2.7%?
[17:12] Speaker 9: About 6 billion was stolen. That's what we know so far.
[17:15] Speaker 9: But it does seem like things are mostly contained. I mean,
[17:18] Speaker 9: we've all been saying to each other this just today,
[17:20] Speaker 9: you know, normally when the biggest exchange in the world
[17:23] Speaker 9: gets hacked, you'd expect there to be some more fallout
[17:27] Speaker 9: than just Bitcoin sinking to kind of a multi-month flow
[17:30] Speaker 9: and everything else is kind of ticking along. It does
[17:32] Speaker 9: seem to be pretty contained, though, as you kind of
[17:34] Speaker 9: pointed out earlier. So we've seen Binance come out and
[17:37] Speaker 9: say that they can fully cover the losses that have
[17:39] Speaker 9: been mentioned there. They're also looking at trying to recover
[17:43] Speaker 9: some of it through the normal routes, through law enforcement.
[17:46] Speaker 9: Some of it's been frozen, but their company funds could
[17:48] Speaker 9: cover it regardless, even if they didn't recover those funds
[17:52] Speaker 9: the other way. So it's all kind of still moving,
[17:54] Speaker 9: still progressing along, but generally everything seems pretty stable.
[17:58] Speaker 5: It does, actually, given the magnitude here. I've seen in
[18:02] Speaker 5: the Bloomberg reporting blockchain intelligence firms have pointed to North
[18:06] Speaker 5: Korea as behind the Binance heist.
[18:10] Speaker 6: What do we know there?
[18:13] Speaker 9: So several blockchain analytics firms have already kind of done
[18:15] Speaker 9: the work on trying to mapping how the money moved
[18:18] Speaker 9: after it left Binance. And the way that they look
[18:20] Speaker 9: at that, it kind of tells us whether or not
[18:22] Speaker 9: this might have been North Korea. And what they can
[18:24] Speaker 9: say is that some of the patterns that we're seeing
[18:26] Speaker 9: and how those funds are being laundered so far match
[18:29] Speaker 9: what the DPRK has done in the past. And so
[18:31] Speaker 9: they're able to kind of say with a degree of
[18:32] Speaker 9: confidence that this is North Korea behind it. They can say,
[18:35] Speaker 9: you know, oh, well, the funds have been moving through
[18:38] Speaker 9: these particular mixing platforms that help kind of obscure the
[18:41] Speaker 9: transaction paths, make it harder for you to follow the
[18:43] Speaker 9: tokens through the blockchain ledgers. And they can say, you know,
[18:47] Speaker 9: they're doing a certain amount of automation as well, moving
[18:49] Speaker 9: funds automatically back and forth to certain wallets to try
[18:51] Speaker 9: and make it harder to follow as well. So all
[18:53] Speaker 9: of that is kind of painting a picture that North
[18:55] Speaker 9: Korea was behind this.
[18:57] Speaker 4: And this isn't the first time the North Koreans have
[18:59] Speaker 4: been behind some crypto hacks as well. It really raises
[19:02] Speaker 4: questions over how secure owning Bitcoin is. Does this discourage
[19:09] Speaker 4: new entrants from coming into this market?
[19:12] Speaker 9: It obviously, every time this happens, it does discourage new entrants.
[19:15] Speaker 9: I mean, nobody likes to buy something that they don't
[19:18] Speaker 9: think is safe. But from the people I've been speaking
[19:20] Speaker 9: to today, it seems kind of a bit of like, well,
[19:22] Speaker 9: this is just kind of what you get with crypto, right?
[19:25] Speaker 9: Like we're in a moment now where institutions are really
[19:27] Speaker 9: trying to move into the space, thinking about should they
[19:29] Speaker 9: allocate to Bitcoin? If so, how much? You can do
[19:32] Speaker 9: that through various means. If you're worried about touching the
[19:35] Speaker 9: crypto directly and having exposure to things like this, then
[19:37] Speaker 9: you can do things like buying a Bitcoin-tied ETF, for example,
[19:40] Speaker 9: versus the crypto asset itself. That comes with some fees
[19:43] Speaker 9: and some trade-offs, but also feels a little bit more secure.
[19:46] Speaker 9: If you're willing to touch the asset directly itself and
[19:48] Speaker 9: engage with a crypto exchange, like Binance, then that comes
[19:51] Speaker 9: with its own level of risk, but also the promise
[19:53] Speaker 9: of a higher reward. That's kind of what you get
[19:56] Speaker 9: when you buy into crypto. You have to be willing
[19:58] Speaker 9: to make that risk reward trade-off. And that's kind of
[20:01] Speaker 9: what people are saying right now. It's like, you know, well, Yes,
[20:05] Speaker 9: this could be a thing that turns people off from
[20:07] Speaker 9: joining crypto. It might turn off institutions from wanting to
[20:10] Speaker 9: deploy in it in huge size. But it also is
[20:13] Speaker 9: kind of part of part of how it works. You know,
[20:16] Speaker 9: you want that big return. You have to take this
[20:18] Speaker 9: with it as well.
[20:19] Speaker 5: Emily, just 30 seconds left here. What are we seeing
[20:22] Speaker 5: with funds flows to crypto ETFs?
[20:27] Speaker 9: Crypto ETFs, I mean, I haven't actually checked today, so
[20:30] Speaker 9: I'm going to be honest with that. But I mean,
[20:31] Speaker 9: in the last few weeks, they have been on the rise.
[20:33] Speaker 9: So that has been a positive sign for the industry.
[20:35] Speaker 9: I mean, Bitcoin itself has been at lows for the
[20:37] Speaker 9: last few months. It hasn't really been recovering in the
[20:40] Speaker 9: way people would have liked after it sunk a lot
[20:42] Speaker 9: over the summer. So ETFs have been a sort of
[20:45] Speaker 9: bright spot in that sense. Nothing super huge, no few
[20:48] Speaker 9: billion here and there. We'll have to wait for the
[20:51] Speaker 9: end of the week to kind of see what that
[20:52] Speaker 9: looks like for an overall weekly picture. And if the
[20:54] Speaker 9: institutions that were holding ETFs are worried by this today,
[20:57] Speaker 9: but I mean, broadly, you know, they shouldn't be affected.
[21:00] Speaker 9: We know the exchanges that custody the Bitcoin for these ETFs,
[21:03] Speaker 9: Binance is not usually one of them. So typically, I mean,
[21:06] Speaker 9: if it's the institutions who are kind of looking through
[21:09] Speaker 9: and actually making like a full risk assessment, then there
[21:12] Speaker 9: shouldn't be too much happening with it.
[21:14] Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
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