World’s leading firms, investors debate bull and bear cases for crypto as market bounces off lows
The good news? As of Tuesday, BTC prices were up around 10% for the week. The less-good news? Both crypto and traditional markets are still hovering near multi-year lows. From surging inflation and a crippled supply chain to the end of COVID-era stimulus and the war in Ukraine, a wave of negative factors has erased trillions of dollars in investor gains. With the Fed expected to raise interest rates at least three more times over the next few months, we wanted to see what the smart money — from Wall Street and beyond — thinks will happen next. Here’s what they have to say:
- According to a new report from JPMorgan, Bitcoin “has significant upside from here” and has become the firm’s “preferred asset” over real estateas an “alternative investment” while interest rates soar. The report also suggests that sustained venture capital flowing into crypto would help avert a “long” crypto downcycle. And despite CEO Jamie Dimon’shistory as a prominent crypto skeptic, the bank participated in a $60 million fundraise for the blockchain analytics firm Elliptic last October.
- Investment in crypto technology shows no signs of slowing, with Andreessen Horowitz (a16z) announcing a record breaking $4.5 billion crypto fund. The new fund brings the firm’s total investments in technology related to the crypto-powered future of the internet (also known as web3) to $7.6 billion. The firm’s founder, Marc Andreessen — who helped shepherd the early internet era with his company Netscape and has navigated down cycles including the 2000 dot-com crash – sees major parallels to earlier moments: “The only time I have ever said ‘this is like the internet’ is this … I don’t take the comparison lightly … we could actually imagine the entire global economy running on the blockchain.” (a16z is a Coinbase investor.)
- At the World Economic Forum last week in Davos, hedge-fund giant Ray Dalio explained his rationale for adding some BTC to his portfolio: “We’re in an environment where we’re going to ask, ‘What is the new money? What is the type of money we can move between countries that is a medium of exchange and a storehold of wealth?’ Bitcoin has made a tremendous achievement over the last 11 years.” Likewise, legendary value investor Bill Miller — whose bets on Amazon and BTC made him a billionaire — remains committed to Bitcoin: “I consider Bitcoin an insurance policy against financial catastrophe.”
- But not everyone gathered at Davos was as optimistic, with Guggenheim Partners’ Scott Minerd predicting that BTC may not see a bottom until $8,000. Minerd — who in December of 2020 predicted that BTC was on its way to $400,000 — now says, “Bitcoin and any cryptocurrency at this point has not really established itself as a credible institutional investment.” Other Davos attendees noted that bear markets have more to offer than just pain: “It’s good, because it’s going to clear the people who were there for the bad reasons,” said the CEO of theWeb3 Foundation. “So the legit ones will be able to focus only on developing on building and forget about the valuation of the token because everyone is down.”
Why it matters… With interest rates set to rise over the coming months, market watchers expect continued turbulence — but do rising interest rates automatically mean that crypto prices will fall? We can look at the past for clues. From 2016 to 2019, U.S. interest rates rose from nearly 0 to 2.5%. BTC? It rose from nearly $400 to over $10,000. And whether we’re experiencing a full-on crypto winter or just weathering a shorter-term storm, some of the biggest banks and venture firms in the world appear to remain bullish on the technology’s future — and are setting themselves up to ride the next wave.
- Story Provided by Coinbase Bytes