Bitcoin’s reflecting a new dimension of thinking about cryptocurrency: Rayliant Global Advisors CIO

Jason Hsu, CIO of Rayliant Global Advisors, joins Yahoo Finance Live to discuss cryptocurrency, inflation pressures, and outlook on the market.

Video transcript

KRISTIN MYERS: So I want to turn now to look at the broader markets. We've got Jason Hsu with us. He's the chief investment officer of Rayliant Global Advisors. And Jason, thanks so much for joining us. Now I want to talk about some of those inflation figures. We saw the sharpest year over year rise in inflation in more than a decade. How much does inflation present a risk to the markets right now?

JASON HSU: Well, inflation, I think, is the driver of prices today. And I think some of that fragility we're seeing in the market is precisely because inflation has now made all good news a potential bad news, right? It was the case before. Bad news is probably good news, and good news even better news. But now, with inflation rearing its ugly head, people are thinking maybe good news is going to cause the Fed to hike rates earlier than expected. And that's going to have a dampening effect across all sectors and across all assets. So inflation is very much the focal point.

ALEXIS CHRISTOFOROUS: Jason, what are your thoughts, though, on how some investors are treating the cryptocurrencies as a hedge against inflation? I mean, we just heard Jared talking about Dogecoin being up over 40%. The thing started out as a joke, as a meme. And now, you know, it's seeing a lot of that. And here we have on the screen the cryptos all higher today. So what do you make of that?

JASON HSU: Well, I think for the lovers of crypto, for the longest time, the rallying cry is this is one way to hedge against central banks money printing, to hedge against financial repression. Now that inflation is really top of mind for everyone, I think that's going to add fuel to the run-up in crypto. Now, of course, we're starting to see some divergence across the different cryptos. You have, on the one hand, really, Dogecoin, which is really more of a practical joke, showing the greatest gain. So there is both a [INAUDIBLE] inflation.

But I think there's also still a lot of speculation representing maybe a rotation of the more irrational, hot bubble money. But you're also seeing Bitcoin really being the lagger here, reflecting now a new dimension of thinking about cryptocurrency, which is that cryptos aren't all the same. And in the case of Bitcoin, it is not very green. And I think for the more socially conscious, you know, Gen Y investors, that's starting to be an issue. And perhaps what is a differentiating characteristic is now a undesirable characteristic for Bitcoin.

KRISTIN MYERS: Hot bubble money-- I definitely like that phrase. I'm going to start using it, Jason. I want to ask you about tech. You talk about the fragility in that sector. You were just mentioning about rotation. We've seen a lot of rotation out of that tech sector. I'm going to ask you what I was asking Francis Gannon in the last hour, which is, do you view this moment of rotation as an opportunity to buy into those beaten down tech stocks?

JASON HSU: Oh, I think personally, I'm a little scared. Sometimes you get reversal after some price reversion. But oftentimes, it can transition downright into extended negative momentum. And I think given we're sort of at this transitioning phase where people are betting on the next rotation to be from growth into value and that people are genuinely concerned about the valuation of the tech stocks, right, it used to be, again, bad news for tech stocks or good news, there's always a spin, right? If you didn't like the topline, you can look at the bottom line. Didn't like the bottom line, you could look maybe sort of user increase.

But now people are focusing on the uglier of the three. So you're really seeing analysts, investors, and sentiment to all be very cautious and slightly neutral to negative. And I think there's a risk that sentiment goes from neutral, negative to outright negative, negative. And again, you know, with a backdrop of inflation and potential rate hike, which had previously been the positive, you know, winter tale for tech, that may become a headwind. So I'd be more cautious around trying to buy on a dip.

KRISTIN MYERS: All right, Jason Hsu from Rayliant Global Advisors, thanks so much for joining us today.