Demystifying cryptocurrency one month at a time

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At first glance, if you watch the crypto news right now, things don’t look so good. “China declares cryptocurrency transactions illegal; Bitcoin Price Falls, ”screams the headline of yesterday’s Wall Street Journal. Bloomberg, citing news from China and the SEC threatening to continue the Coinbase cryptocurrency exchange, called September a “dark month for crypto.” Indeed, after crossing $ 52,600 earlier this month, bitcoin fell 20% to almost $ 43,000.

And all of this is true, as far as it goes. Until you consider that China has long pushed back all things crypto, even though it is cautiously exploring a stablecoin tied to a digital version of the yuan. (A stablecoin being a cryptocurrency attached one by one to a relatively stable asset such as the dollar, gold or in this case the yuan.)

Bitcoin enthusiast Carlos Bonilla shows a physical representation of the cryptocurrency, at a Bitcoin Beach help desk at El Zonte Beach in Chiltiupan, El Salvador on June 10, 2021. Photo taken on June 10, 2021. REUTERS / Jose Cabezas REFILE – CORRECT INFORMATION

And there are the other recent headlines, like the one from CNBC: “You can now get paid in bitcoin for using Twitter,” or this story from CoinDesk “Crypto industry could add $ 184 billion in economic value to India by 2030: NASSCOM “. Or this one from the Wall Street Journal, “Switzerland gives green light to Crypto Trading Exchange”.

Which one is it then? Crypto up or down? Is crypto at some kind of crossroads? Yes, yes and no. I don’t want to be flip, it’s just always that with crypto. And it will be years and years and probably decades to come, until this is all sorted out.

The story continues

What do I mean by sorted? I mean there are so many key questions that need to be answered. Here are a few: Will crypto supplant money? (Or at least partially?) Are cryptocurrencies a form of exchange, or a store of value, i.e. an investment? How and when will crypto be regulated? Or is it the case, as Ray Dalio recently suggested, that cryptocurrencies are doomed to fail if they get too powerful, as governments would ban them? (More on Dalio later.)

We’ll answer these questions and more at our “Yahoo Finance All Markets + Summit: Investing in Crypto” this Monday, September 27 from 12:00 p.m. EDT to 1:30 p.m. EDT on yahoofinance.com. (Please join us!) We have an exceptional guest group including Kristin Smith, Executive Director of the Blockchain Association; Joseph Hall, partner of Davis Polk Capital Markets Group; and Michael Sonnenshein, CEO of Grayscale Investments. (Full disclosure, Grayscale is the event sponsor.)

Yahoo Finance + Crypto Investing’s All Markets Summit will take place on September 27 from 12:00 p.m. to 1:30 p.m. ET.

I spoke with Sonnenshein a few days ago and asked him how business was going. The guy was optimistic, despite the dark month. “Grayscale’s business – and the crypto ecosystem as a whole – has grown exponentially throughout 2021, and we’ve never been so encouraged by the maturation of the digital asset ecosystem,” he said. -he declares.

Grayscale, a crypto asset investment manager, is owned by DCG, Digital Currency Group, a crypto holding company, founded by billionaire Barry Silbert. Speaking of billions, and just to give you an idea of ​​how crazy this business is, later in my conversation with Sonnenshein he mentioned that Grayscale has over $ 40 billion under management. What? The last time I checked it was $ 20 billion. It’s still a long way from a giant like BlackRock, which manages $ 9.5 trillion, but the trajectory is impressive.

There is no doubt that investor interest continues to grow. Zack Guzman, one of our Anchors and Resident Crypto Expert, recently gave a presentation where he noted how the most searched tickers on our platform have changed over time.

A chart of the top 10 tickers on Yahoo Finance as of May 28, 2021. Courtesy of Zack Guzman.

A chart of the top 10 tickers on Yahoo Finance as of May 24, 2019. Courtesy of Zack Guzman.

Zack also put a few quizzes in this deck, including this one:

A cryptocurrency quiz, courtesy of Zack Guzman.

Answers to the cryptocurrency quiz, courtesy of Zack Guzman.

The answers to the quiz are informative in many ways, including the fact that Dogecoin (DOGE-USD), which performed the best, is actually a ridiculous currency, or as Wikipedia notes: “Dogecoin (DOHZH-koyn, code: DOGE, symbol: Ð) is a cryptocurrency created by software engineers Billy Markus and Jackson Palmer, who set out to make a payment system like a joke, poking fun at the savage cryptocurrency speculation at the time. . Despite its satirical nature, some see it as a legitimate investment prospect. Dogecoin features Shiba Inu dog face from the “Doge” meme as its logo and namesake. It was introduced on December 6, 2013 and quickly grew its own online community, reaching a market cap of over $ 85 billion on May 5, 2021.

So, to be clear, one of the best performing pieces of this year is … about nothing. They’re bananas, no matter what is terrifying. On the other hand, one of the best TV shows of all time, “Seinfeld,” was also famous for nothing.

I last wrote about crypto in July where I postulated that “bitcoin (BTC-USD) and its ilk is to money what the Internet is to information – a numerical variation, little costly and less hampered. As such, cryptocurrency and blockchain are a parallel universe to the world inherited from finance, soon to reflect all facets of what came before and possibly one day to subsume it.

If so, then what are world leaders, regulators and politicians doing about it? China, under President Xi Jinping, will undoubtedly continue to keep a heavy hand on all things crypto, as discussed earlier. And there will be consequences for better or for worse. The extraordinary crypto entrepreneur, Sam Bankman-Fried, featured recently in this Yahoo Finance article by Roger Parloff, announced at the end of the week that he was leaving the increasingly crypto-hostile surroundings of Hong Kong for the Bahamas. Who wins and who loses here in Hong Kong or Nassau? Depending on the goals of their respective governments, they could both win. This is the world of crypto.

As for the United States, regulators are now scrambling to address at least some facets of crypto, which is welcomed by many in this world. According to the New York Times, the focus is now on stablecoins. SEC Chairman Gary Gensler – who taught a crypto course at MIT – has repeatedly called the crypto markets “the Wild West.” Presumably, this alludes to the need for some law and order. Guess who the sheriff will be?

Which brings us back to Ray Dalio, whose comments I referred to were from an interview the hedge fund billionaire recently did with CNBC’s Andrew Ross Sorkin, where Dalio said this about regulators and bitcoin. :

“I think in the end, if it really succeeds, they’ll kill him and they’ll try to kill him.” And I think they’re going to kill him because they have ways to kill him, “Dalio told Sorkin Wednesday on CNBC’s” Squawk Box “at the SALT conference in New York.

Leaving the conspiratorial tone aside, I think Dalio may be a little offbeat here. I don’t think the government will kill bitcoin or crypto for a number of reasons. Firstly, because I don’t think they can, certainly not globally in our digital age, that is, this cat is not going to fit in the bag. Second, rather than trying to “kill” it, regulators will find it more prudent to co-opt it, which, third, will happen to one degree or another anyway.

In the meantime, what should an investor do?

I must point out that the title of my aforementioned July story was actually a question. Namely: “Do you have to own (maybe just a little) bitcoin?” The answer I gave was, yes, but a small amount. Did I follow my own advice, you will ask? Yes? Did I earn any money? No. In fact, I’m down 29.93%. This dark month certainly did not help my cause.

I tell my kids not to worry about it, though. The dollar amount is not going to drain anyone’s inheritance. And who knows? There is always next month.

This article was featured in the Saturday edition of the Morning Brief on September 25, 2021. Receive the Morning Brief directly to your inbox Monday through Friday before 6:30 am ET. Subscribe

Andy Serwer is editor-in-chief of Yahoo Finance. Follow him on Twitter: @serwer

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