Grayscale CEO Michael Sonnenshein says the worst for crypto markets is probably over and digital currencies are showing signs of decoupling from traditional stocks.
In a new interview with cryptanalyst Scott Melker, Sonnenshein says contagion from the FTX crash and other crypto sector setbacks is no longer something to worry about.
“I would like to say that of the shoes that are going to fall, I hope they have all fallen. We are certainly saddened as an organization and certainly I, having been in crypto for so long, am obviously very sad to see a lot of people who stumbled on FTX or who are waiting to see how the Genesis bankruptcy turns out. But I am cautiously optimistic.”
He says that while equity markets are showing volatility, cryptocurrency prices remain in a relatively tight value channel, suggesting that they may start to function independently of traditional financial markets.
“Honestly, I think the combination of what we're seeing again now in the equity markets with volatility again, I'm not sure where rates are headed, but we're starting to see cryptocurrencies hold in a fairly narrow band of a price may be signs that things are decoupling from the stock market, and perhaps, for most investors, they think that whatever pain there is going to be in the market has already been out there and digested, and not just been bankruptcies or insolvencies, we've seen a lot of pressure put on miners and other parts of the ecosystem.”
The CEO of Grayscale says it is unclear if cryptocurrencies will hit all-time highs again anytime soon, but says relative price stability could contribute to a healthier crypto sector overall.
"I have hopes. Whether we return to all-time highs or not remains to be seen. But I will say that it's interesting in these types of environments where prices stagnate a little bit more, you really start to weed out those who are long-term players and people who are really building and focusing on the crypto ecosystem from those who are just trying to make money fast or not by actually investing in crypto for the long term.”
Sonnenshein also says that he is excited about the new crypto use case, ordinals. Ordinal entries are digital assets enrolled in one satoshi, the lowest denomination of a Bitcoin (BTC), and similar to non-fungible tokens (NFTs).
“Well, certainly one thing that has improved in recent months is the idea of ordinals, which I think is very interesting. I continue to be impressed with how crypto as an industry continues to unlock new use cases."
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