Bitcoin Roller Coaster Tour

Bitcoin got a wild ride after hitting record highs and then withdrawing. Dan Roberts of Yahoo Finance looking at who might have been buying the dip.

Video Transcript

ADAM SHAPIRO: Let’s turn to Dan Roberts, because Bitcoin investors are on a bit of a roller coaster, up, down, up, down. The highlights were above 40,000. Then they collapsed, but back up again. Dan, money never sleeps, especially when it’s Bitcoin. It’s always trading, right?

UNDER ROBERTS: Well, you’re right, Adam. There is no market close for Bitcoin. And look, people who have been invested in this space for years are used to short-term volatility. That is, that’s what you get with cryptocurrency.

Now, if you look at the last few weeks, as you mentioned, there has been a serious correction and we have sat as low as 28,000 in the last 48 hours. But I think taking a lot of this takes profit. I mean, just 10 days ago, Bitcoin was 40,000. So you have some people who exchange money. Remember the price has doubled in about a month. And now you have big institutional firms buying back in, buying the dip.

The other thing that I’d point out, and I’m always careful, Adam, as you know, to give the caveat that it’s not just one news headline that moves this market. Now having said that, there was some negativity, and you saw a bit of a dip after what Janet Yellen said a few days ago at her confirmation hearing. She said she doesn’t like the fact that cryptocurrency is used for illegal financing. She has since clarified her views. In a letter to the Senate Finance Committee only yesterday, she explained that she wants to bring in new regulation and new frameworks to foster innovation with cryptocurrency and ensure that it is used for better things.

So she is very hung up on using Bitcoin and other coins for cybercrime, and there are many who are worried about that. But you know, I think maybe it’s a kind of over-reaction, that people have said, oh, Janet Yellen is going to be unfriendly to Bitcoin. And incidentally, as Secretary of the Treasury, she won’t be the one overseeing Bitcoin anyway.

SEANA SMITH: It won’t. But Dan, I mean, I think one of the big issues or one of the big questions here regarding Bitcoin, certainly for investors thinking maybe investing in Bitcoin, has been the volatility, what they should expect now going forward, especially since it is getting more and more interest from institutional investors. Do you think that will have any impact on volatility here going forward for Bitcoin?

UNDER ROBERTS: Well, it’s interesting. You know, Jared Blikre and I were a few weeks ago here on the shows discussing a research report that suggested that so many long-term holders, founding companies, had invested that the amount of Bitcoin that is in circulation for trading is likely. to be even more volatile. You know, it’s a small supply, because those big companies have bought big chunks and they still have it.

Now, having said that, again, I mentioned short-term volatility. I really want to emphasize that. Bitcoiner that has been in it for a decade points to the full timeline, that whole chart since the beginning. And they say, look how much it has risen over time.

And that’s true. Long-term volatility, but my goodness. It has increased and jumped over time, even if you were just looking five years ago. Now, of course, everyone points to the two huge peaks and then the corrections afterwards and says, oh, it’s too volatile. 2017 and then the correction in February 2018, and now the huge ride we saw at the end of 2020 to 2021. I don’t expect the short-term volatility to change, no.

But I’d say, Seana, no matter if you’re a big believer in space, something cynical used to say. They would say, Bitcoin could go to nothing. I don’t think that will happen. No one really knows what will happen to the price in the coming weeks or months, for sure, but it is going to be nothing.

ADAM SHAPIRO: Well, and only today, it has increased by about 10%. Dan Roberts, thanks so much for another Bitcoin crypto update. We appreciate it.