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Jill Carlson, Slow Ventures Venture Partner, joins Yahoo Finance Live to discuss how Bitcoin and other cryptocurrencies are faring amid the China mining crackdown.
Video Transcript
ZACK GUZMAN: I want to shift over to the move that we are seeing in Bitcoin here, easing some of those losses here a bit slightly, now under 10% in terms of the losses today that we’re seeing around that $36,000 price level. We got the update out of China headlines coming around potential issues and bans even in terms of mining, which would be a step up from some of the stuff we saw before this week around using cryptocurrencies in transactions, reiteration of the policies that’s been in place since 2017.
But when we look at maybe the institutional players buying the dip, want to highlight data that we have here from Glassnode. Take a look at the on-chain metrics that point out wallets associated with over-the-counter desks when Bitcoin’s price tanked earlier on Wednesday and Thursday. The number of daily transfers from those OTC desks rose tenfold. They hit a high not seen in about four months’ time. The co-founders of Glassnode cited that institutional support as reasons for retail investors out there to hold through the pain.
And for more on where we’re at in the week that was, I want to bring on Jill Carlson, a partner at tech and blockchain-focused VC firm Slow Ventures. She joins us right now. Jill, appreciate you being here. I mean, I feel like I aged 50 years in the last week. I don’t know about you. But we’re still standing here, still in that mid 30,000 level range, maybe close to the 200-day moving average, around 40,000. But what’s your take on where we sit right now, given all the fud out there.
JILL CARLSON: Just another week in crypto, right? I like to joke that crypto years are like dog years. They always tend to be sort of 7x what you would get in any other market. And that was certainly true this week. Look, I mean, I think that it’s an important point to focus on institutions versus retail here. I think it’s not at all a coincidence that we are back to about the price that we were at before Elon Musk first came in and tweeted about Bitcoin back at the end of January. We’re back in the mid 30s.
And, you know, if you look at the rally that led up to that date, it was all institutional driven. And that was a significant rally in and of itself. That was already up 20% on the year. And we’re up more than that still. We’re holding those gains. The retracement that we’ve seen has really been about retail capitulation. And in the grand scheme of things, if you look at the money that matters, it’s going to be on the institutional side, and not the retail side.
ZACK GUZMAN: Yeah, and just lastly, too– or I mean not lastly, but next on the topic of China and in mining, right? Because that was maybe potentially also a factor in the intense sell-off we saw earlier in the week. This time around, a distinction maybe to highlight in terms of Bitcoin mining. And just to kind of throw it out there, when we highlight the actual technology there behind Bitcoin, I mean, we’re talking about miners that could come on and take up the hash rate left by Chinese miners.
And you highlight the issues Elon Musk had to raise that kind of sparked this and the sustainability issues. If you shift away from some of the miners using coal perhaps, that would seem, to me, a boost in terms of addressing some of those sustainability concerns. That would not necessarily impact the network itself. So what’s your take on maybe how it could be a positive if it were to happen?
JILL CARLSON: Yeah, no, that’s right. And I mean, first, we should acknowledge that every six months or so in this industry, you get a China headline that spooks the market without fail. It’s like clockwork. And so, you know, to some degree, for those of us who’ve been around this industry for a while now, we see this headline, and we say, OK, again, it’s just kind of another day in crypto. We’ll see how real this China fear is.
But as you rightly point out, I think over the long term, it could be a real net positive. It could drive a lot of the Bitcoin mining power back into the United States, back into other areas where there is more reliance on renewables and other sources of energy, versus China, where, again, a lot of it is, as you pointed out, coal. And that could help assuage a lot of the fears that have come up around Bitcoin, thanks, again, to Elon Musk’s tweet earlier this week or late last week around Tesla being concerned about Bitcoin’s clean capacity.
AKIKO FUJITA: Is that a real sort of material concern, though? I mean, when we talk about those who are holding Bitcoin trading, I mean, are they really concerned about the environmental issues? I mean, how significant a risk is that?
JILL CARLSON: Look, I mean, I could sit here, and I could give you all kinds of stats around 75% of Bitcoin miners out there to rely to some degree on renewables, so on and so forth. In terms of whether investors actually care, investors care about sentiment. And so to the degree that sentiment has actually shifted around Bitcoin and other proof of work coins, that would be problematic for investors, right?
And Tesla needs to maintain its status as an ESG stock. Tesla needs to maintain its relationship with government and status as an environmental player for all kinds of grants. There are other companies, corporate treasuries, and funds that go in that same category. But again, I think it comes back to sentiment fundamentally. And one thing that I’ll be keeping an eye on is whether or not Bitcoin trades in line with the broader crypto market with a lot of the proof of stake coins and other consensus mechanisms that are less energy intensive, or whether Bitcoin and the proof of work coins continue to trade more weakly than those.
ZACK GUZMAN: Yeah, and Jill, lastly, I liked one of your tweets here that kind of put in perspective, as you say, it’s like dog years. And you can go back and look at maybe some big dips before. Granted, we’ve seen, you know, 30%, 40% collapses in a bull market before when you go back to 2017 or even before. But when you look at where we’re at right now– and this is kind of one of those things that I like stressing on the show– Bitcoin and cryptocurrencies maybe a bit unique there in terms of the benefits of holding through some of this volatility. What’s your advice to maybe newcomers out there who aren’t maybe used to that volatility and what you see in terms of the benefits relative to other asset classes when it comes to just holding it through all this?
JILL CARLSON: Yeah, no, I think the commentary that I provided earlier this week that you’re referencing was– I’m not even sure it appears on that graph that’s on the screen right now. But if you zoom all the way back to 2013– and that was when I got into this market– you know, bought in, the price skyrocketed up to $1,000, crashed, bounced back, crashed again. You know, it’s the nature of emerging technology. It’s the nature of this form of investing. It’s going to be volatile.
And, you know, I think that the principle I would have going into any position is, don’t buy more than you can afford to lose, which a lot of people did last week. And in the lead-up to this when we look at the liquidations and the number of retail accounts that got liquidated, that is problematic. We don’t want that much leverage in this market. It exacerbates this volatility. And so, I think overall, this cleanout is healthy. And my advice would be if you can, hold, and if you can’t, you should really reevaluate your positions.
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