Grayscale CEO Michael Sonnenshein says the worst of the crypto markets is likely over and digital currencies are showing signs of decoupling from traditional equities.
In a new interview with crypto analyst Scott Melker, Sonnenshein says the contagion from the FTX collapse and other crypto sector setbacks is no longer something to worry about.
“I’d like to say that of the shoes that are going to drop, I’m hopeful they’ve all dropped by now. Certainly, we’re saddened as an organization and certainly me, having been in crypto as long as I have, I am obviously very sad to see a lot of people who got tripped up in either FTX or who are waiting to see how Genesis’s bankruptcy turns out. But I’m cautiously optimistic.”
He says that while equity markets are showing volatility, crypto prices remain in a relatively narrow value channel, suggesting they may start to perform independently of traditional financial markets.
“I honestly think that the combination of what we’re seeing again now in the equity markets with volatility again, kind of not sure where rates are headed, but kind of starting to see how crypto is holding in a pretty tight band from a price perspective maybe are signs that things are decoupling from the equity market. And perhaps, for most investors, they think that whatever pain is going to be in the market has now been out there and digested, and it hasn’t just been bankruptcies or insolvency, we’ve seen a lot of pressure put on the miners and other parts of the ecosystem.”
The Grayscale CEO says that it’s unclear if crypto will return to all-time highs any time soon, but he says the relative price stability could make for a healthier crypto sector overall.
“I’m hopeful. Whether we zip right back to all-time highs or not obviously remains to be seen. But I will say that it is interesting in these kinds of environments where prices become a little bit more stagnant you really start to weed out those that are long-term players and folks that are really building and focusing on the crypto ecosystem from those that are just kind of trying to turn a quick buck or not really invested in crypto for the long term.”
Sonnenshein also says he is excited by the new crypto use case, ordinals. Ordinal Inscriptions are digital assets inscribed on a satoshi, the lowest denomination of a Bitcoin (BTC), and similar to non-fungible tokens (NFTs).
“Well, certainly one thing that’s ticked up over the last couple of months is the idea of ordinals, which I think is super interesting. I continue to be impressed with how crypto as an industry continues to unlock new use cases.”
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