Despite crypto values dropping over 80% in 2018 and an ongoing bear market marked by more wild swings in 2019, Jeremy Allaire, CEO of the Goldman Sachs-backed crypto finance company Circle, believes crypto assets are taking a hit they don’t quite deserve.
During a Reddit AMA on January 10, Allaire talked about his theories on the state of the struggling markets.
“My general perception is that the markets have been oversold and that some core assets have decoupled from their usage, which suggests they are undervalued.”
Allaire believes altcoins, which comprise the 1,500+ different cryptocurrencies aside from Bitcoin, are unreasonably tied to the price of BTC and that the correlation will inevitably change.
In 2016 Circle made a push to decouple from Bitcoin (BTC) when it launched Centre, a set of protocol additions that allow Circle customers to make trusted, compliant money transfers between participating individuals and institutions without needing to buy or hold BTC directly. Instead, several blockchains are supported as settlement layers, instead of just Bitcoin.
“We also believe that many assets have traded in a tight correlation to BTC, which is irrational. As the markets mature, we expect less correlated trading as investors better understand the value, utility and adoption of specific crypto assets and networks.”
The ceiling for crypto is limitless, says Allaire. Unlike Bitcoin maximalists who believe BTC’s current 52.3% share of the crypto markets will only swell, eliminating all or the vast majority of competitive coins, Allaire says “crypto assets will continue to proliferate in all their forms.” Instead of just Bitcoin, he predicts there will be millions of different crypto assets.
“Crypto is a much more significant and disruptive innovation than the web, and its impact on society, politics, economics, governance will be far, far greater for humanity over time.”
The main hurdle facing Circle and most other crypto companies is regulation. As governments struggle with how to define and regulate emerging digital assets, blockchain entrepreneurs and companies are left in a state of flux – minus a clear legal framework that allows them to move forward.
“I think the biggest and most immediate regulatory hurdle we face is the lack of specific guidance from the SEC on how to classify various crypto assets. We believe many are clearly currencies and commodities, and there needs to be more specificity on what are really securities.”
You can read the full Reddit AMA here.