Solana nears $100 as the crypto token extends rally: CNBC Crypto World

CNBC Crypto World features the latest news and daily trading updates from the digital currency markets and provides viewers with a look at what’s ahead with high-profile interviews, explainers, and unique stories from the ever-changing crypto industry. On today’s show, crypto experts explain the pros and cons of investing in a crypto-focused stock, like Coinbase, compared to investing in the token itself.

Chapters:
00:00 – CNBC Crypto World, Dec 22, 2023
0:21 – Solana soars
1:26 – Crypto stocks vs. assets

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Solana nears $100 as the crypto token extends rally: CNBC Crypto World

Today Solana’s rally continues as the cryptocurrency nears $100 and we explore the pros and cons of investing in a crypto focused stock like coinbase compared to the crypto tokens themselves welcome to cnbc’s crypto world I’m Talia Kaplan crypto prices mixed to end the week as of noon Eastern

Bitcoin traded pretty flat at $43,500 ether climbed more than 3 half% trading above the $2,300 Mark and sana’s rally continued today with its token Rising more than 5% for the week Bitcoin and ether both climbed more than 3% both cryptocurrencies are on track for their fourth positive week in the last five

Meantime on Wall Street the S&P gained a little less than 1% all right let’s jump right into our main story if you’re thinking of investing in cryptocurrencies you have a choice you could Dive Right into the 1 and5 trillion dollar crypto Market directly by buying Bitcoin or ether for

Example but there’s another way to get exposure you can invest in a publicly traded crypto focused business for some investing in a stock is familiar territory for others exploring the N industry there could be added benefits of investing in the token itself so I spoke with industry experts to find out

The risks and rewards for each strategy both crypto tokens and related stocks are staging a comeback in 2023 after the worst of the crypto winter as of December 20th Bitcoin has more than doubled so far this year Rising around 160% ether climbed more than 80% in the

Same time on Pace for its best year since 2021 meanwhile crypto companies have rallied too micro strategy has more than quadrupled this year and crypto miners Riot and Marathon digital have soared 385 and 546 respectively there’s kind of the the narrative which is buy Bitcoin and chill

Right just let the best performing asset of all time compound over a long period of time it’s a finite asset more capital is going to flow in the price will go up given enough time on the other hand there’s people who say look I don’t want

Just kind of the beta exposure to the market right I want to be able to have some sort of outperformance and so they’ll use leverage they’ll buy equities they’ll do all sorts of different things but if you take more risk you better get a higher return 2023

Is performance is just one part of the picture and overall not every company or cryptocurrency is doing quite so well take coinbase it’s one of the biggest crypto players traded on Wall Street and it’s up more than 350% this year but over the last couple of years the

Company’s stock has struggled we have an underperform rating on coin base one of the reasons is il legal and Regulatory environment pretty unsettled right now the SEC initiated a lawsuit against coinbase back in early June and the outcome of that remains to be seen we also think that it’s going to be

Challenging for coinbase to diversify its sources of revenue Beyond its Core Business which is largely tied to retail trading since coinbase went public in April 2021 shares have plunged more than 35% as of December 20th in that same time frame Bitcoin tumbled 27% while ether actually Rose more than 2 % these

Companies are a proxy they are going to move directionally the same as Bitcoin but not precisely the same and while they fell a lot more over the last two years they also grew more in the good years the reason the prices fell so much is because they had risen much higher in

The first place so you’re getting the best in both you know you can’t have it both ways you can’t get both higher return and lower risk those are on a seesaw you’re going to get a lot of one you’re going to get a lot of the other

And of course for most investors the big question is which strategy is going to make the most money with the least risk in 2024 both the assets and crypto focused companies face big catalysts and major headwinds that could influence investor returns Bitcoin is the dominant cryptocurrency that’s likely to continue

In 2024 and there’s a major event coming in the year ahead that could drive prices the having the key technical event takes place every four years and reduces rewards for successfully mining new Bitcoin by half the goal to reduce the supply of Bitcoin over time before

The last having in 2020 the price of Bitcoin increased by 19% from the same day a year earlier when you look at these Market Cycles historically they’ve been kind of four-year Market Cycles in between these Bitcoin habings and so usually what will end up happening is

You’ll get about 2 and 1 half to 3 years from the bottom of uh the last bare Market to the top of the next bull market and then you’ll get about a year year and a half Market correction and so historically there has been hundreds of

Percent up and then you get about an 80 % draw down Bitcoin isn’t the only one likely to benefit from the having either in a recent report Bernstein says it expects Bitcoin miners in particular to outperform the broader Market going forward thanks in large part to the

Having event Bernstein argues the cut to mining rewards will likely Drive consolidation among miners as lower payouts mean the more efficient firms will make more money what we’re seeing when it comes to bitcoin miners is in 2023 they have been the better asset to have allocated to now the question

Becomes will that remain over one period of time miners aren’t the only crypto companies facing stiffer competition coinbase Robin Hood and similar firms felt the pressure in 2023 as crypto trading volume plummeted and transaction Revenue dried up in 2024 crypto businesses will have to prove their staying power in my view there’s very

Little scenario where the businesses themselves succeed but the tokens themselves fail if Bitcoin and eth disappeared from the world tomorrow is that business going to be successful I would argue probably not could but unlikely versus there’s a high chance that the business doesn’t succeed competition someone else replaces them

Margins compressed but the tokens themselves are fine the business goes away Bitcoin and ether are still around in 2025 or 2030 one major challenge still lies ahead for both crypto assets and crypto companies alike regulation in the United States I think that coinbase and other companies like it have understandably expressed some

Frustration the lack of regulatory Clarity that we’ve seen coming out of the US government which agency is going to be responsible what are the what are the rules going to be the industry has pushed for clearer rules but none have made it past the early stages in

Congress so far and Regulators like the SEC are still cracking down on crypto with enforcement action that’s unlikely to slow in 2024 I think we we are going to continue to see active investigation and pursuit of crypto companies that are operate outside of the the guidelines I

Think in some cases like for Kraken it was very hard for them to know how to register and what the guidelines are and we’ve seen even coinbase have a similar issue in the past and they put more effort towards Regulatory Compliance probably than anyone I mean I think that

The more companies that are forced to come into compliance the better and you know I think most companies are going to do everything they can to comply and I think that the SEC and the lawmakers and the cfpc can all make this a lot easier by being very very clear on what those

Rules are now there’s also the potential for an all new crypto investment strategy coming in 2024 in the form of spot Bitcoin and ether ETFs if approved spot crypto ETFs would let Wall Street players buy into digital assets through a regulated exchange that could drive up the price of Bitcoin and ether major

Crypto companies could benefit too as they help the ETFs operate if they are approved coinbase is expected to have a custodial r with at least some of those ETFs which in and of itself would be a positive it would mean some incremental revenue for them however ETFs could certainly represent a form of

Competition because an individual investor in particular might say well you know I can just buy an ETF through my existing broker and own Bitcoin that way rather than having to open an account at coinbase to actually buy and sell Bitcoin coinbase has an important role to play here we’ve been named as

The custodian in many of these ETF applications and our view is that it’s going to be really good it’s going to bring in new sources of capital into the crypto Eco system that’s going to be good for crypto but it’s also going to be good for coinbase speaking with CNBC

In September coinbase CEO Brian Armstrong also address the potential for more competition for coinbase if those spot crypto ETFs get approved we haven’t seen any margin compression yet and our general view is that we want to grow the size of the pie so we want crypto to be integrated into every traditional

Financial Service firm we want it to be integrated into every fintech out there we want it to be integrated into new types of wallets web 3 that’s just coming on the scene so I don’t view it as competitive coinbase has really incredible infrastructure that we’re

Going to be able to power a lot of these things to have a piece of the pie but the most important thing is we got to grow the size of the pie so with so much news driving the crypto industry in 2024 what’s the game plan for investors well

Some experts say it might be less about one investment over another and more about investing across a wide range of assets what a lot of people choose is diversification in other words instead of trying to make a bet as to which approach is better do a little bit of

Everything this way you are protecting yourself by not making a single bad bet you’ll be directionally correct own a little bit of Bitcoin a little bit of the Bitcoin ETF a little bit of these crypto stocks if you’re doing it in that fashion no one thing will hurt you and

You’ll be directionally doing well along with the rest of crypto okay that’s all for crypto world this week but we’ll be back again on Tuesday after the Christmas holiday and we’ll see you Then