- Zac Prince is the CEO of BlockFi, a crypto firm that offers high interest rates on crypto deposits.
- Prince recently shared his 2022 outlook on topics like tokens, NFTs, the metaverse, and regulation.
- Specifically, he broke down the three key trends he is watching in the year ahead.
The crypto market has had a volatile start to the year.
As US inflation surges to a nearly 40-year high, investors speculate that the
Federal Reserve
could hike interest rates three or even four times this year while seeking quantitative-tightening measures.
The changing macro environment has breathed fear into financial markets. The Crypto Fear & Greed index remains squarely in the “extreme fear” territory as bitcoin hovers near $43,000.
Against such a backdrop, some are expecting another multi-year crypto winter, while others believe that the gradual decoupling between bitcoin and leading altcoins means that a prolonged period of downward
volatility
is no longer in the books.
As the market remains stuck in flat trading, there is another way to make money.
BlockFi, a crypto-finance firm that offers lending, borrowing, trading, and other payment services, pays investors up to 9.5% in interest rates for depositing their cryptocurrencies and stablecoins into its interest accounts.
What’s made such high yields possible on BlockFi is the relative inefficiency in crypto markets. The firm is able to charge high rates when it lends out the capital that clients are holding on its platform.
However, high rewards usually come with high risks. For example, the deposits are not insured by the Federal Deposit Insurance Corporation. BlockFi itself has also faced regulatory scrutiny in multiple states as regulators warn that its interest accounts may be unregistered securities offerings.
Zac Prince, the CEO and co-founder of BlockFi, which manages $10 billion in assets, recently shared with Insider his 2022 crypto outlooks on everything from tokens to NFTs, the metaverse, and regulation.
The Q&A below has been slightly edited for length and clarity.
With the market in a sea of red, many are preparing for another multi-year “crypto winter.” How do you make sense of the current market environment?
Crypto markets are not for the faint of heart. Yes, it can be volatile — especially if you’re following the markets 24/7. If you zoom out though and look at the year-over-year performance, you’ll see that from the end of 2020 to the end of 2021, bitcoin alone is up nearly 60%. This is similar for other notable crypto assets like ethereum (which is up 418% year over year) and solana (which is up 9,622% year over year).
My philosophy is simple: do your homework and think long term. Just like when you’re considering investing in the public markets, you always research the company before making a decision. Crypto investors must do the same. Research the crypto assets that you’re interested in investing in, and make sure you believe in the fundamental values of those blockchains and their runway for success over time. When thinking long-term, most people aren’t traders, so I generally recommend that folks buy things that they are comfortable holding for at least a few years.
What’s your market outlook for the year ahead? Any price predictions for BTC and ETH? What are some high-conviction tokens on your radar for 2022?
I’m bullish on the crypto markets for 2022. There is so much momentum in the sector across retail and institutional adoption. This is in addition to tremendous growth in the capital markets support for the ecosystem and phenomenal teams building valuable products. Overall, there is too much momentum for prices not to rise long term. Digital assets are some of the best-performing assets in the last decade and the rate of mainstream consumer adoption already is astronomical.
As for specific crypto assets on my radar for 2022, I predict that blue chips like Bitcoin and Ethereum will continue to perform incredibly well relative to traditional asset classes. I also expect the trend we are already seeing with great performance from the better, faster, cheaper alternatives to Ethereum to continue — Solana, Luna, and Avalanche are names to look at.
How do you view this Facebook-driven boom in the metaverse? What about the recent virtual land grab that has seen plots of digital land sold for millions of dollars?
There’s a lot of innovation and hype going on in the metaverse space, and it’s an especially exciting time for creators and innovators. That said, only time will tell what is merely hype and what will generate sustained adoption and become part of our day-to-day lives.
For example, NFTs are extremely buzzworthy right now with a lot of investments flowing into new startups and initiatives. I recently acted as an
angel investor
for a Series A funding round in Arcade, an NFT lending platform. There’s a lot of value behind certain NFTs, and I believe that investors should have access to securing NFT-backed loans just as they do crypto-backed loans via BlockFi.
Crypto regulation has been front and center given some of the recent congressional hearings. What do you think should be the focus of lawmakers and policymakers when it comes to regulating the industry?
The primary focus should be clarity. BlockFi is a fervent supporter of regulation of the crypto industry. With regulatory clarity, we are going to see an explosion of innovation and adoption in crypto that will benefit all investors and continue to position the US as a leader in innovation and financial markets.
What are some of the key themes and events in crypto on your radar for 2022?
The key theme that is essential for growth and innovation in the crypto space is regulatory clarity. BlockFi is actively engaged with US regulators at both the state and federal levels in educating them about the crypto financial markets and potential guideposts for regulation. Once regulatory clarity is achieved, I anticipate there will be a huge surge into the space by both retail and institutional investors. New clients — those on the more crypto-curious side — will be looking for resources and tools to easily buy, sell and trade crypto for the first time. And more advanced clients — the crypto fluent — will look for a platform that will help them do even more with their existing and future crypto investments. BlockFi is well-positioned to service all crypto wealth needs, especially those looking to do more with their crypto — like actively trade, secure crypto-backed loans, earn crypto rewards back on credit card purchases, and, hopefully, invest in ETFs.
Additionally, on the ETF front, in 2021 we saw Canadian regulators approve the first Bitcoin Spot ETF for Canadian investors and US regulators approve the first Bitcoin Futures ETF for US investors. Contingent upon regulatory clarity, we could see more expansion on the ETF front in the US. It would be a gamechanger if everyday folks in the US could have the opportunity to invest in a wide variety of crypto ETFs — such as a Bitcoin Spot ETF — through a 401(k) or Roth IRA as they continue to build their wealth and secure financial freedom for themselves and their families.
Finally, I anticipate we are going to see more developments in the crypto payments space. We’ve already seen a huge amount of enthusiasm for the BlockFi Crypto Rewards Visa Signature Credit Card since the launch in July 2021. More and more consumers are not only getting into crypto but wanting to do more things to increase their exposure and participate in the crypto economy. Having a credit card that allows you to earn crypto back on every purchase is satisfying this demand. We’re hearing loud and clear from our more than 75,000 cardholders that they want more features and mobile payments offerings — like a debit card — in 2022 and beyond.