Bitcoin falls below $43K

Emily Parker, CoinDesk Global Macro Editor & CoinDesk TV Anchor joins the Yahoo Finance Live panel to discuss the latest cryptocurrency news.

Video transcript

AKIKO FUJITA: Welcome back to Yahoo Finance Live. We are seeing Bitcoin trading still below that $43,000 level, although it is still not as ugly as it looked yesterday. Remember, Ethereum down significantly during the session as well-- both Bitcoin and Ethereum down about 2% right now. Let's bring in Emily Parker, Coindesk Global Macro Editor and "Coindesk TV" anchor.

Emily, let's talk about what we saw yesterday-- clearly an ugly day across the markets, but a big pullback in Bitcoin as well-- depending on the time of day, down about 8% to 10%. You know, we saw-- we heard the case for a while about Bitcoin being a bit of a safe haven, as odd as that sounds given the volatility. And yet yesterday, we saw it pull back with so many other assets. Talk me through the moves here and what specifically you think led to the declines.

EMILY PARKER: So we have to have the evergreen disclaimer that we never really know what's driving Bitcoin's price. But you're absolutely right. I think what yesterday showed is that Bitcoin is not immune to downturns in the traditional market. And I think that does undercut this fundamental myth of Bitcoin that Bitcoin is a safe haven.

It may be a safe haven over the long-term, but over the short-term, this is not the first time we've seen a crash in the traditional market that has spread to Bitcoin as well. So there does seem to be some correlation there. The correlations are kind of all over the place. But again, you know, we saw this last year with the pandemic-- there were downturns in the overall market that affected Bitcoin as well.

AKIKO FUJITA: Another story I know you've been covering very closely here is the explosive growth that we have seen in DeFi. And you say specifically $90 billion held in collateral-- I mean, you think about the conversation we had a year ago, DeFi barely existed, at least in the public discussion, now you've got so many different features going on here, the very latest coming from "The Economist" as well. That's caught the attention of regulators. What are you watching specifically on that front and what that's likely to do to cap the kind of growth that we have seen so far?

EMILY PARKER: So I feel like this is the fundamental narrative in crypto right now is that you have this exponential growth of this technology and you have government regulators scrambling to catch up with this. And we are seeing that play out in the United States with decentralized finance, or DeFi, because it is a very new technology, it's a very revolutionary technology, it's a confusing technology. And I think lawmakers are just trying to figure out what to do with it.

So yes, it's amazing-- we saw DeFi featured on the cover of "The Economist," we saw it featured in a lead story in the "New York Times"-- I mean, that definitely signals that it's hit the mainstream. But what we don't know is how the US government will handle it. SEC chair Gary Gensler has said straight out that he doesn't believe DeFi is immune to regulation.

And I don't think people in the crypto industry think that there shouldn't be regulation. Regulation can be good for the growth of the industry. But what we need is smart regulation. And DeFi is very important in the United States. You know, a lot of these leading projects are here in the US. US dollar stablecoins are a big part of the DeFi economy. So how the US government decides to handle DeFi will be really important for just the growth of the space as a whole.

AKIKO FUJITA: Emily Parker, Coindesk Global Macro Editor and Anchor, always good to talk to you.