Crypto is at ‘a real inflection point,’ Decrypt editor-in-chief says

Decrypt Editor-in-Chief Dan Roberts joins Yahoo Finance Live to discuss the crash in bitcoin, the outlook for the cryptocurrency market, and news that YouTube is exploring NFTs.

Video transcript

- OK, so as we move into the Crypto Corner today, and we're going to invite into the stream the editor-in-chief from Decrypt. That would be Dan Roberts. Look, a headline that says, not a great day in equities or crypto, doesn't get quite the attention as, oh my gosh, it's a crash. But what's a crash? Dan's going to help us. And there's an article in Decrypt right now that puts this into not only context. But the next time your friends who might not have that much experience on the day-to-day say, oh my gosh, it's a crash, slap them silly. Dan, explain.

DAN ROBERTS: Well you're right, Adam, that when Bitcoin falls say, just 10% in a day or two days, many, many mainstream sites run screaming headlines about Bitcoin is crashing again. And it gives people who already don't really believe that crypto is a great investment a chance for a victory lap. And they say, see, it's so volatile, it's a fraud, it's a Ponzi. But 10% really isn't a crash in Bitcoin land.

Now, of course, that said, in the last of days and the last couple of weeks, you really have seen a crash. I think it's fair to call it that, what we saw, especially a few days ago with Bitcoin moving more than 30% in just a few days. And in fact, if you look at the highs of November when it was higher than $60,000 and then we got as low as $33,000 on Saturday and on Monday, I think it's fair to call that a crash.

Now, even that said, we're beginning to climb back. As we talked today, Bitcoin's up 3%. ETH, Ethereum, is in the green again. And I think that right now what's interesting to me about crypto prices is you're seeing them behave in lockstep with tech stocks. And there's always been a fun debate over just how correlated crypto is to the equities market.

Right now, the same kind of effects are having an impact on both. You can throw around terms like contagion. You could say it's the Fed announcing that it wants to take more aggressive steps to curb inflation. You could say it's the Omicron variant and COVID. There's just a lot of things right now. And this is a time when you're going to see the people who really believe in crypto buckle down. And it reminds me of 2018.

And by the way, I'm not necessarily declaring this crypto winter again. We might have so much buy-in that it's not going to be quite that bad. But if you go back to 2017, which before the pandemic was the last time we saw a huge surge, Bitcoin went to $20,000. We all remember it. It was the big mainstream mania. And then in February 2018, we saw like a 70% over the next few months crash. That was crypto winter.

And what crypto people said at the time was we're heads down and building. And right now, it's a real inflection point. Have we seen the bottom? And are we going to climb back up? Or is it going to be another extended crypto winter. But what I like to tell skeptics is, it's not going to go to zero.

No one knows what's going to happen next with the price, but what bears always say is, the whole thing could collapse. It could go to zero. It has never done that. It has never gone to zero. It's not going to go to zero. And crypto is here to stay and is going to be around a long time. What happens in the short term with price? Anyone's guess.

- Well Dan, and to that point, as you were mentioning earlier in your answer to about this increased correlation that we've seen with stocks and with tech stocks specifically, do you think that heightened correlation is going to change the post-crash playbook for where crypto prices are headed in the near term?

DAN ROBERTS: Well, I think a big part of this, Emily, is the institutional investment that we saw pour into crypto during the pandemic. You know, I mentioned 2017. And before that, the last huge crash was more than 50% in 2013. Those were early days compared to now. And it mostly retail investors. It was regular folks who had bought crypto on Coinbase and other exchanges. And it was crypto OGs who have been in it since 2009.

Now you're seeing more buy-in than ever before. You know, I don't want to use the phrase "too big to fail," but Wall Street hedge funds, prominent investors who previously didn't want anything to do with crypto that have now said they've allocated 1% to 2% of their portfolio, big publicly traded companies that have allocated some of their treasury to crypto.

Because of all that, I do think that, you know, some of the same people who are getting hammered by the drop in tech stocks are getting hammered now. Are they going to cycle out of crypto when they only just got in, or will they hold on like the HODLers do and show that they believe long term? It's anyone's guess, but some of those people who have only been in crypto for a year, it would be silly if they now dump, right? I mean, they only just got in. They bought in at the peak. Time to buckle down and hold on if you really believe that the technology is here to stay. But let's see how much longer it remains correlated. The correlation between Bitcoin and the NASDAQ especially was the highest it's been in years over the last six months.

- Dan before we get to the Trump coin and legal action the Trump family may be taking regarding that, got to ask you, what does it mean if YouTube, who so fondly brought us cats riding vacuums, actually brings us NFT options? What does this mean for creators on the platform?

DAN ROBERTS: Well, it could be a new revenue stream. It could be really interesting. You could just view it as a money grab for YouTube. And let's make sure we say at this point YouTube has only merely hinted that it's eyeing this space. It is considering something in the NFT space. If I had to guess what that looks like, I would point you to NBA Top Shot, where the NFTs are video clips.

And of course, Top Shot was really credited with starting the big NFT boom last March. And the NFTs on Top Shot are little NBA highlight video clips. Since its YouTube and since it's a video network, the NFTs are likely to be videos. And let's remember for the unschooled here, that NFTs can take lots of forms. They can be PFPs, which are profile pictures like Bored Apes or CryptoPunks, which, really they're just a static image and you use it as a flex. It's a status symbol. You change your Twitter profile picture to it. It could be metaverse in-game tokens. They can be membership passes where you have to own a certain NFT to get into a club.

So YouTube would just be the latest big name to embrace NFTs. Twitter just did it last week and we talked about it on this program. We'll see if they do it, and we'll see what it looks like. But it would probably be video clips, and boy, it would be interesting because a lot of gamers have huge backlash to NFTs. They don't like them.