Crypto issues 'not just idiosyncratic' to the space, industry expert argues
Crypto expert on where the industry is headed
Ava Labs President John Wu argues that in the last couple of years, the crypto industry has shown ‘a lot of overlap within traditional finance.’
Ava Labs President John Wu argued Monday that many of the issues associated with the crypto market selloff were macro-oriented, and other issues that came into play were "not just idiosyncratic" to the space.
The cryptocurrency expert explained those issues include unsecured lending, layering of leverage and lack of transparency, which also "existed in traditional finance."
"So at this point, I think the idiosyncratic stuff to crypto has actually played mostly out," Wu said on "Mornings with Maria" Monday, adding that where it goes from here depends on what happens with growth stocks, internet companies and where the draining of liquidity is going to take hold in terms of the macro picture.
Wu provided the insight as bitcoin was trading lower around the $20,400 level, down from its all-time high of over $68,000 reached in November 2021. Ethereum was also trading lower on Monday, at around $1,143.
CLICK HERE FOR FOX BUSINESS' REAL-TIME CRYPTOCURRENCY PRICING DATA
|COIN||COINBASE GLOBAL INC.||54.76||-5.53||-9.17%|
|BITQ||EXCHANGE TRADED CONCEPTS TRUST BITWISE CRYPTO INNOVATORS E||6.18||-0.49||-7.35%|
Bitcoin, the leading cryptocurrency, has taken a beating in 2022, continuing a decline that started in November last year. For most of the year, the value remained within touching distance of $40,000, but two large drops – one at the beginning of May and one in June – brought the currency to less than one-third of that November high.
Bitcoin and other cryptocurrencies have had some rough weeks in anticipation of and following rate hikes by the Federal Reserve as the central bank seeks to combat soaring inflation, which is at a high not seen in four decades.
The expectation now is that the Fed will continue to take aggressive action to try and curb inflation, which has reduced investor appetite to hold assets perceived as higher risk.
This past year, tighter monetary policy has impacted both stocks and cryptocurrencies.
Last week, Reuters reported that U.S. crypto lender Voyager Digital said the company had filed for bankruptcy, becoming another casualty of the dramatic drop in prices that has rattled the sector.
Gemini founders Cameron and Tyler Winklevoss have warned that the crypto industry is entering a "crypto winter," described as a "contraction phase settling into a period of stasis." The cryptocurrency exchange recently cuts its staff by 10%, citing "turbulent market conditions that are likely to persist for some time."