Crypto 'winter is here': Expert

Bitcoin traded below $30K on Monday

Delta Blockchain Fund founder Kavita Gupta explained on Monday why she believes a "a crypto winter is here" as bitcoin traded below $30,000.

Speaking on "Mornings with Maria" on Monday, Gupta noted that "we are seeing one of the biggest dips in the [crypto] market in a long time" as prices have been "slashed down" from all-time highs.

She pointed out that bitcoin and ethereum are currently trading at about half the price of their highs and that is why she believes "a crypto winter is here."

Gupta also noted that the crypto market is currently experiencing a "correction" from its "crazy speculative highs," warning that "it looks like it’s going to stay."

VOLATILITY IN CRYPTO MARKETS TO CONTINUE FOR NEXT FEW MONTHS: EXPERT

Bitwise Asset Management CIO Matt Hougan also warned last week that volatility in the crypto market will stick around for a while.

Speaking on "Varney & Co." he warned that volatility will stick around for the next three to six months, but noted that he believes "the long-term outlook for bitcoin is very strong."

Along with the stock market, bitcoin has experienced a lot of volatility recently. On Thursday, for example, bitcoin plunged to the $25,000 level, its lowest since December 2020, then bounced back over $30,000, according to CoinDesk. As of Monday morning, the crypto was trading just below the $30,000 level, down from its all-time high of over $68,000 reached in November 2021.

The crypto is down more than 35% year-to-date.

Ticker Security Last Change Change %
COIN COINBASE GLOBAL INC. 237.65 +18.79 +8.59%
BITQ EXCHANGE TRADED CONCEPTS TRUST BITWISE CRYPTO INNOVATORS E 12.38 +0.62 +5.27%

Bitcoin and other cryptocurrencies have had some rough weeks in anticipation of and following the half-point interest rate hike by the Federal Reserve. It was the second of several anticipated increases this year as the central bank seeks to combat soaring inflation, which is at a high not seen in four decades.

Crypto was trading lower on Monday morning (REUTERS/Dado Ruvic/Illustration / Reuters Photos)

The expectation now is that the Fed will take aggressive action to try and curb inflation, which remains near 40-year highs, according to the data for April released on Wednesday, which has reduced investor appetite to hold assets perceived as higher risk.

This past year, tighter monetary policy has impacted both stocks and cryptocurrencies.

Adding to more fears of volatility in the crypto market was the decoupling of the TerraUSD, a stablecoin whose value was tied to $1, the Wall Street Journal reported on Thursday. The world’s largest stablecoin by market cap, tether, also briefly edged down from its $1 peg on Thursday. 

CLICK HERE FOR FOX BUSINESS' REAL-TIME CRYPTOCURRENCY PRICING DATA 

Stablecoins are digital currencies with values that are pegged to traditional assets, like the dollar, another currency or gold. Its correspondence with the dollar is what, in theory, makes it stable, however, volatility in the crypto market last week challenged that presumption.

Gupta told host Maria Bartiromo on Thursday that the U.S. Securities and Exchange Commission (SEC) regulation on stablecoins is ultimately a positive development. 

"Regulations should be in this space, anything when you call it stable, which is supposed to be stable, but I think there is also a whole field of innovation, which is going to continue to happen on programmatic stablecoin," she said.  

"I think there is a lot of space for programmatic stablecoins to be in the space with some sort of the right regulations, which we still don’t know whether it’s overregulations and under regulations in the space yet," she added. 

On Thursday, a top official at the SEC indicated that tighter rules around crypto stablecoins could be drawing closer, Reuters reported. 

Referring to stricter regulations, "one place we might see some movement is around stablecoins,"

GET FOX BUSINESS ON THE GO BY CLICKING HERE

SEC Commissioner Hester Peirce referred to stricter regulations when he reportedly said during an online panel debate hosted by the Official Monetary and Financial Institutions Forum policy think tank that "one place we might see some movement is around stablecoins." 

U.S. Treasury Secretary Janet Yellen told a House committee hearing on Thursday that the sharp drop in crypto markets highlighted the need for additional federal regulation to respond to the wave of speculative investment in the currency whose secrecy is a major part of its attraction. 

"We really need a regulatory framework to guard against the risks," Yellen said of stablecoins. 

CLICK HERE TO READ MORE ON FOX BUSINESS 

The Associated Press contributed to this report.