Why bitcoin continues to represent less of the overall crypto market cap

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Noelle Acheson, Head of Market Analysis at Genesis Trading, joins Yahoo Finance to discuss the latest news in cryptocurrency and NFT.

Video transcript

SEANA SMITH: Bitcoin isn’t moving much today, albeit under slight pressure just above 48,000. But we got some strong words from billionaire investor John Paulson. He said that cryptocurrencies, that they would end up being, in quotes, “worthless”. So let’s talk about that and Noelle Acheson. She is responsible for market analysis at Genesis Trading. And Noelle, it’s good to see you. Crypto has its share of skeptics. We know that a lot of people have had pretty choosy words when it comes to cryptocurrencies and whether or not they are a smart investment.

But what do you think of the crypto market, what do you think investors think of the comments we received from John Paulson today?

NOELLE ACHESON: Well, first of all I have to say I respect his way of saying crypto is a limited supply of nothing. It made a lot of us laugh. It wasn’t a surprise, Seana. We know that there are institutional investors, traditional investors, who share this logic. Then, we also have investors with a very strong reputation such as [INAUDIBLE] Jones, Stanley Drunkenmiller, Bill Miller, and many others who take a different view of the role crypto assets can play in the macro scene. And what [INAUDIBLE] on potential use cases and eventual acceptance.

But that’s what makes a market, different points of view. I must caution that all I am saying is my opinion, not that of my employer. And nothing I’m saying is investment advice. But it’s always interesting for those of us who work in this industry to try to see through the eyes of the skeptics. This helps us to reaffirm our thesis of being in this industry. And one thing Mr. Paulson said, I don’t want to put words in his mouth, but it’s something that deserves a lot more thought. And it is that crypto has no intrinsic value. Now what does this mean?

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Again, don’t put words in his mouth. I understood that to mean it wasn’t backed by anything physical like gold or silver. But what is it nowadays? I mean technology is a big part of most wallets. Now that is not the case, and fiat money is not. And these very important asset groups are, just like Bitcoin for example, backed by use cases, networks, social consensus, if you will. Are they intrinsic? Are they of value? So maybe the whole concept of intrinsic value needs a new look.

– Noelle, and that’s a good transition to the question I was going to ask, which is about the $ 1.3 million NFT of a rock. Obviously, the NFT market has garnered a lot of attention. But as you mentioned, I mean, is all of this really iconic of a crypto asset bubble? Or is it just kind of a part of the nuances of the art collection? The value you place on that panel of Jamieson behind you might not be the value I place on it because it’s subjective. What’s the big story in regards to the NFT explosion we’ve been seeing lately?

NOELLE ACHESON: That’s a wonderful question, Brian. And I laugh because we don’t really know. Of course, it’s chaotic. I think the answer to your question is actually it is both. Yes, there are bubble aspects to that. But there’s also a fundamental shift in how we understand value, how we engage with each other, how we engage, how we engage with culture, how brands engage with their customers, how athletes, musicians, any type of creative artist can begin to develop his community. It’s a fascinating shift in the paradigm of how we invest our time.

And this is very, let’s say, out of order with the change we are seeing in social norms. It started before the pandemic. The pandemic has certainly accelerated with young people, not so young too, spending more time indoors, not by choice, spending more time on their phones, communicating with each other through valuable digital artifacts. If we don’t understand the fundamentals, kind of like I hinted at earlier, that we don’t have the fundamentals doesn’t mean they don’t have value, doesn’t mean they aren’t. here to stay.

Of course, they can be … [INAUDIBLE] We even saw $ 2 million for a JPD of a rock that was different from the others due to the shade used. Yes, I’m scratching my head there. But it’s emblematic of the change in the way we think about how we express ourselves. I am fascinated to see where this is going. I think it’s only just beginning.

SEANA SMITH: Noelle taking a look at Bitcoin, because you pointed it out in your note, Bitcoin now only accounts for just over 40% of the total crypto market cap. That’s down from 70% at the start of this year. Is this a change you expect? And I guess, what do people prefer instead?

NOELLE ACHESON: That’s a fascinating question. Yes, I think this is a change that I expect to make. And while obviously my personal opinion is that Bitcoin still has a lot of ways to operate, we are seeing data to show it, that doesn’t mean it shouldn’t go down in terms of the market. Wait, what we are seeing is the growth of the rest of the market. This is a very healthy sign, a very positive sign for the whole ecosystem as they all tend to lean on each other as well.

We are seeing tremendous growth in the other layers. Layers are what we call basic blockchains. And then you have all kinds of apps on top of that. But core blockchains, different types of core blockchains, are exploding in value. Some of them have performed so far this year of over 5,000%, which is pretty hard to fathom, isn’t it? What he is saying is that people are experimenting much more widely than Bitcoin, that Bitcoin is no longer the only one with access to institutional investors in this space. And that’s a very healthy diversification.

– And Noëlle, finally here. I want to ask a question about Cardano. It also attracted a lot of attention. It is a decentralized blockchain platform that was actually built by the co-founder of Ethereum. ADA, I believe, is a digital token that is there. It also attracted a lot of attention. So should we expect to see this as part of a larger trend for more types of tech to keep coming out, but also to gain a lot of traction? Because it seemed like some people had been saying for a very long time that maybe we saw the peak of new types of technology that people wanted to invest in.

NOELLE ACHESON: That’s a really good point, Brian. Thank you very much for bringing it up. Yes this is a sign of the trend that we are seeing, what does even the peak mean? Maybe some things will gain popularity and decrease in popularity. But what we do know, what we have seen, is that the innovation hasn’t stopped. The funding has not stopped. Even in the last bear market, which I haven’t seen in previous bear markets, funding for this industry in terms of market infrastructure players, in terms of protocols, has not stopped. It actually accelerated. And innovation again, just the technological experience and knowledge that we’re gaining from these fine-tuned new protocols, experienced with serious amounts of value online indeed.

It’s really exciting. We also have to remember, Brian, that this is new technology. Those of us who have been in the industry for a while may think Bitcoin is seriously old. But it’s not. He’s only 12, which in the arc of things is a small amount of time. And some of the newer ones like Cardano, which hasn’t even really launched its smart contract capability yet. Very, very new. Ethereum is also going through fundamental changes, one of the most ambitious life-long technological experiments. [INAUDIBLE] that I’ve never seen.

And what we learn from all of this is that it’s invaluable.

SEANA SMITH: Noelle Acheson, Head of Market Analysis at Genesis Trading, always happy to hear from you. Thank you very much for joining us today.

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