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Monday, November 28, 2022

Bitcoin ‘still has some room’ to rally amid market downturn: CoinShares CEO

Occurring parallel to the recent downturn in equities markets has been a sizable pullback in the prices of cryptocurrencies. According to CoinShares CEO Jean-Marie Mognetti, though the space has been taking a beating, popular cryptocurrencies like Bitcoin (BTC-USD) may still be able to recoup losses even in the face of rising interest rates.

“It’s going to be interesting to see how it’s reacting in a bit of a more medium term perspective, but I think Bitcoin still has some room,” Mognetti told Yahoo Finance Live. “And it’s going to be almost testing the capacity of the Fed to tighten the economy and also the interest rate, and get back the grip on the economy.”

Mognetti joined Yahoo Finance Live to discuss the outlook for the crypto space in light of the recent market downturn. Based in London, CoinShares is the largest digital asset manager in Europe and manages the first-ever regulated Bitcoin hedge fund.

‘Market bleeding’

Crypto bulls still remain confident that the space still has much more space for growth. Cathie Wood’s ARK Invest predicted that Bitcoin’s price could reach as much as $1 million by 2030, believing that crypto adoption is still in its infancy.

“About Cathie’s evaluation, I think [the] analyst put a very strong penetration rate case behind it to show where it’s going to penetrate and how it’s going to penetrate the market,” Mognetti said. “And you know, everybody can go with [their] own call … The numbers are very relative depending on what they are.”

In spite of this potential strong growth outlook, he said that crypto prices bore the brunt of the “market bleeding” being seen. Bitcoin and Ethereum (ETH-USD) are currently sitting at nearly 50% of their all-time highs that they achieved back in November 2021. Mognetti believes that pullbacks like these serve as a “good reminder” to investors about the volatile nature of digital assets.

“So our clients are, as we are, getting accustomed to it and getting used to [the volatility],” he said. “The real differentiation is which wave of clients is being impacted these days.”

According to Mognetti, CoinShares’ new clients in 2021 may not have been as accustomed to the sometimes substantial fluctuations in cryptocurrency prices.

“We have clients [who have been] with us since 2015, 2016, and [who] have experienced this cycle, and they are almost the ones educating the community to make them understand how the journey is going,” he said.

Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter @thomashumTV

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