What happened
After a rough week, cryptocurrency assets are on the mend on Monday morning. The calendar has turned over to a new month and the stock market is up slightly with crypto assets climbing as well. Investors seem to be moving back into riskier assets and that’s broadly helping the cryptocurrency market slightly.
From its low on Sunday to early Monday, Bitcoin (BTC -1.27%) was up as much as 3.1% and the value had jumped 4.2% from Saturday’s lows. Ethereum (ETH -0.28%) was up 3.9% from lows Sunday to highs early on Monday. Crypto exchange Coinbase Global (COIN 7.66%) was up as much as 8.5% in trading Monday and is up 6.9% as of 1 p.m. ET.
Image source: Getty Images.
So what
Over the weekend, Berkshire Hathaway CEO Warren Buffett poured cold water on the cryptocurrency market once again, saying he wouldn’t pay $25 for all of the Bitcoin in the world. This is a long-running criticism from Buffett, who isn’t known as a bleeding-edge investor in technology companies. And with cryptocurrencies being so new and unproven in the financial markets it’s not surprising to hear more negative comments from Omaha.
At Coinbase, over the weekend it was reported that the company has hired Durgesh Kaushik, formerly the head of Snap India, as senior director for market expansion. TechCrunch reported Kaushik helped grow Snap’s user base to about 130 million people in India and Coinbase doesn’t yet have a significant presence in the country.
One of the biggest opportunities for growth at Coinbase is international expansion. The exchange is popular in the U.S., but in the international market, it’s dwarfed by Binance and FTX.
Now what
Broadly, the cryptocurrency market has been very volatile so it’s no surprise to see the value of top cryptocurrencies and an exchange like Coinbase be volatile as well. But the market has been selling tech and growth stocks for months and these are the kind of assets that have been caught up in that, right or wrong.
Over the next year, I think it will become clear how much of this sell-off has been foreshadowing a decline in cryptocurrencies overall and how much is a misunderstanding of crypto’s long-term potential.
I think investors will see significant advancements for blockchains like Ethereum in scaling and lowering costs while companies like Coinbase continue to build out the infrastructure that traders and developers need. This will make the crypto market more accessible and innovative and with billions of dollars flowing into start-ups, it’s hard to tell where the industry will go from here.
I wouldn’t take too much away from today’s trading as a result. It’s not clear if crypto and stock values have already hit bottom or if the market will drop further in the short term, but in the long term I think there’s a lot of value here for investors willing to hold on for the volatile ride.