Cryptos fall as markets turn negative amid omicron concerns

Coindesk Managing Director Emily Parker joins Yahoo Finance to discuss the price action in cryptocurrencies amid Wednesday's volatile day of trading.

Video transcript

ADAM SHAPIRO: All right, let's jump into the crypto corner. 14 minutes to the closing bell. Bitcoin has been falling today. It's trading below 58K. We were above 58K yesterday, but back down we go. A lot of people had been talking-- when you talk about cryptocurrencies, they point to Bitcoin and they say it's kind of like gold if you're looking for a way to hedge your bets, a safe haven in trying times. Well, we're in trying times with the omicron acknowledgment that we now have that virus, that variant here in the United States.

But let's talk about what else is coming down the pike and why perhaps Bitcoin and other cryptocurrencies might not be the safe haven some were telling us that they were. Emily Parker is a managing director at CoinDesk. It's good to have you here. What are we getting wrong, those of us who had assumed that Bitcoin could work as a safe haven?

EMILY PARKER: Well exactly that. That's what we're getting wrong. Bitcoin is not behaving as a safe haven. We saw it crash basically on Black Friday. It's linked to fears over this new variant. It crashed along with the equities markets. And we've seen this before. We saw this in 2020 when the markets crashed due to COVID, fears of COVID. Bitcoin went down with it. So Bitcoin definitely does not always act as a safe haven. And there are a lot of correlations between Bitcoin and just the traditional market.

ADAM SHAPIRO: So when we talk about Bitcoin and then the other cryptoassets that we can invest in, should we just totally dismiss these as potential safe havens and just look at them as pure risk-on kinds of assets?

EMILY PARKER: No, I mean, I think, look, there's definitely a longer term play here. And the correlations between Bitcoin and the traditional market are kind of all over the place. Sometimes it's correlated, sometimes it's not. And I think if you're looking longer term, I mean, you know, if you buy into this narrative that Bitcoin is a hedge against inflation, for example, I mean, for me, personally, it makes sense that Bitcoin would serve as a sort of safe haven because there are different mechanisms driving Bitcoin than there are that are driving equities markets, for example. So I think you have to think longer term here. And I wouldn't completely throw away the safe haven argument.

ADAM SHAPIRO: What about Ethereum? Because we get so focused on Bitcoin because it's the huge number. Ethereum around 46-- 4,604 bucks, down today. But why do we diss Ethereum so much? It actually is where we should be paying most attention, isn't it?

EMILY PARKER: Yeah, I mean, I'm definitely not dissing Ethereum. I think Ethereum has actually been outperforming recently. Ethereum recently hit an all-time high. So Ethereum, there's basically two types of investors in Ehtereum. I mean, one is just kind of investing because it's number two market cap, and it's like, OK, Bitcoin is going up. Rising tide lifts all boats. Let's buy some Ether as well.

But then there are also investors in Ether who are looking at Ethereum specifically because there are definite use cases for Ethereum that are different from Bitcoin. For example, NFTs, decentralized finance, even the Metaverse boom. These are more specific to Ethereum. And I think the boom in all those areas is definitely leading to an increase in Ether's price.

ADAM SHAPIRO: Is Ethereum getting the attention of the larger investment houses or institutional investors who can kind of stampede and stomp on those of us who are much smaller?

EMILY PARKER: I think we're starting to see it. Obviously, it's not the same level as Bitcoin yet. Like, we don't have the same level of institutional investment in Ether. But we're definitely starting to see interest, at least hearing about it.

ADAM SHAPIRO: I just got to ask you, there was the news, Mr. Dorsey leaving Twitter, saying that if he didn't have Square or Twitter, he'd be working on Bitcoin. I'm wondering if Bitcoin would want him working on Bitcoin, but what do you have to say about what he said?

EMILY PARKER: So I mean, I think, look, you know, it's all speculation. Nobody really knows what's going on in Jack's mind. But I mean, it's clear that his heart is in cryptocurrency, and his heart is in payments. So I don't think this came as a huge surprise. I mean, he's kind of been multitasking. He was the CEO of two big companies. And now he's clearly choosing. I mean, it seems likely that he will stay involved with Square.

And, you know, Square is very heavily involved in Bitcoin, right? It holds some of its cash reserves in Bitcoin. You can buy and sell Bitcoin on Square's Cash App. Square's also been talking about getting involved with decentralized finance or Bitcoin mining. So, you know, Jack has been signaling his interest in Bitcoin for a long time. So this just seems, you know-- this makes a lot of sense if you've been following what Jack has been saying and doing.

ADAM SHAPIRO: I have family members who are big on Bitcoin. And I get so worried. And yet they always throw back at me-- I think it was Goldman Sachs-- pick your investment analyst-- who said, look, 100K. I think there was one as high as 250K within the next year. Are those people having to eat crow right now? I realize the analysts always get to change their calls. But what's going on with those--

EMILY PARKER: Exactly.

ADAM SHAPIRO: --calls right now?

EMILY PARKER: Well, so, you know, I think it's Tim Draper who predicted $250,000 by the end of 2022. So he still has time, right? He could still be right. We still have a while to go. And look, here's the great thing about Bitcoin. It's wildly unpredictable. So you can make a crazy prediction. And you might very well be right. So, no, I wouldn't say they're eating crow. I think most of these people are actually holding on to their predictions.