William Quigley, Co-Founder of WAX and Tether, Cryptocurrency & Blockchain investor, joins Yahoo Finance to discuss the outlook on the crypto market.
ALEXIS CHRISTOFOROUS: Cryptocurrencies appear to be in a bit of a summer slump lately. We’ve got trading volumes at the largest exchanges, including Coinbase, Kraken, and Bitstamp, falling more than 40% in June. Here to talk about it is William Quigley. He is Cryptocurrency and Blockchain Investor and Co-founder of Wax and Tether.
William, it is good to see you here. So tell us why there has been sort of this falling out of love with cryptocurrencies on the part of investors recently?
WILLIAM QUIGLEY: Well, it’s on again, off again, as you know. Bitcoin has probably going up or down by 10% hundreds of times in the past 10 years. But the triggers this time around were pretty clear. The first was China saying it wanted to ban Bitcoin mining.
That spooked people, because they started wondering, are they going to do anything else to curb the adoption of Bitcoin? I personally think there’s a lot to do with what China is doing with our new digital currency. They’re coming out with their own stablecoin. And I just think they want all the attention on that.
The other thing that triggered huge growth in Bitcoin and Bitcoin volume was this fear that there was going to be inflation in the United States, especially last year in the early part of this year. And so lots of people were trying to get out of assets that were going to be heavily affected by the dollar and into things that couldn’t be debased– Bitcoin being one of those, because there’s a finite amount that’s ever going to be printed.
I think that had a pretty big effect. When the inflation rate now is starting to look like it’s not going to be as dangerous, the Fed has gone from pumping over $100 billion a month into the economy to much less– it’s signaling that it looks like the economy’s growing, looks like we’re going to be OK. So we can kind of step back a little in pushing out a lot more currency into the market.
So since that was a big trigger to buy Bitcoin, now that that risk is being taken off the table, people, I think, are just lowering their ownership stake. And then you have another, I would say, a small issue, but it could be near-term an issue, which is the Grayscale Trust, which holds over 600,000 Bitcoin, it is unlocking about 35,000 Bitcoin in the next week or so.
Those will be available to be traded, which could cause some downward pressure in the short-term. So those are a bunch of just the overarching issues. You could also say summer doldrums. But Bitcoin price is still above what it was in January. It is three times the price it was in October. So the market is still very healthy. You know, we got a little spoiled with several months of just dramatic price increases and dramatic volume increases.
ALEXIS CHRISTOFOROUS: But you know, William, when you look at the tape today on inflation, it’s still running pretty hot. And at least in the near-term. Inflation seems to be top of mind for investors. So what’s your feeling on this digital asset as a hedge against inflation? Do you think that it may come back into favor and be used as a tool for investors in that way?
WILLIAM QUIGLEY: I do. I think last year was the first time that I saw, broadly speaking, Wall Street start to be worried about inflation in a serious way because of the unprecedented amount of stimulus that was going into the economy to offset the damage done by COVID. And maybe enough time had passed, 10 years into the life of Bitcoin, that they started to realize, this is going to be here to stay.
And so I do think it will be– it’ll continue to be an inflation hedge. Look, it’s superior in almost all respects to gold as an inflation hedge. It’s also done much better than the last 11 years than gold. Bitcoin has only been down twice year-over-year in the last 11 years.
So if you look at day-to-day, even month-to-month, it looks highly volatile. But most of us think of volatility as when it goes down. We don’t really care so much of it’s going up. We’re not worried.
And Bitcoin has done better than any other asset class, major traded asset class, except US stocks in the last 11 years. So I think there’s a lot of confidence that it’s still a good place to go.
ALEXIS CHRISTOFOROUS: William, if you were to make an educated guess, when might we finally see that cryptocurrency ETF here in the US that seems to be– regulators seem to be pushing the can down the road?
WILLIAM QUIGLEY: I think now that Wall Street has really started to embrace cryptos, and certainly embrace Bitcoin, it’s got to be within the next year. But you’re right, it’s been, I want to say, at least five years that we’ve been waiting for an ETF to actually come about.
And during that time, we’ve had really broad adoption of cryptocurrencies. We’ve had so many companies announce they’re going to take cryptocurrencies, either as a payment or an investment. You even have now major sports leagues getting sponsored by cryptocurrency companies.
Venture capitalists put in $17 billion into blockchain-based companies just up to this year. So there is a ton of support moving into blockchain and crypto. And I think that’s going to lead to a lot of Wall Street investors allocating some portion of their portfolio to cryptos– you know, not a ton, but you should be putting at least as much as you would, let’s say, as you would do for gold.
ALEXIS CHRISTOFOROUS: All right, William Quigley, co-founder of Wax and Tether, thanks for being with us today.