Crypto bear market offers ‘good opportunity to build’: Valkyrie Funds CEO

Valkyrie Funds CEO Leah Wald joins Yahoo Finance Live to discuss bitcoin falling below $21,000, the crypto sell-off, bear markets, and the outlook for the cryptocurrency market.

Video transcript

[MUSIC PLAYING]

JULIE HYMAN: The selloff in cryptocurrency is continuing today. Bitcoin sinking close to 20,000 earlier in the session. It's recovered a little bit, but still down on the day. Down more than 70% since its peak last November. The selloff, of course, rippling through the bitcoin futures-based crypto ETF universe, including Valkyrie's bitcoin strategy ETF. It's down over 50% this year alone.

Joining us now to talk about the action, Valkyrie Funds CEO Leah Wald. Leah, thank you for being here. Obviously, it's been quite a ride downward here for the crypto universe. And, you know, even though, yes, these cycles have happened in crypto before, what is a pretty young asset class, it can't feel great when it's happening. So how do you sort of think about it as we are in this period? And how low do you think bitcoin will go?

LEAH WALD: Yeah, and thank you so much for having me. You're absolutely right. For those of us that have been in the industry, it is-- you know, it's historically true that we have weathered these types of storms. But again, we are firmly in a bear market now. Never feels good. Bitcoin is down 54% year to date. Ethereum is down nearly 70% year to date. And more than $2 trillion in notional value has already been wiped off from digital asset valuation since last year's high. Naturally, this is following a lot of issues fundamentally. But the TA is just-- technical analysis is just not lying. And unfortunately, it is not looking good.

- We're looking right now as well at this sort of speculation vacuum, if you will, within the broader crypto landscape, and even into some of the other spaces where people are invested into. But what do you believe will come out on the other side as we kind of are watching this shakeout, sure, in prices, but also in projects?

LEAH WALD: I think that that's a good question, and actually will bring a smile to my face today. So thank you for that.

[LAUGHTER]

I do think that in bear markets, you have a good opportunity to build. That's what I firmly believe. That's what excites me about-- just coming back from maternity leave this week, I'm excited because of that. I think that historically, you're able to hunker down. And you've seen that across the crypto ecosystem. In 2018, in the various bear markets, you've seen a lot of projects that weren't built on firm foundations get completely wiped out. And that's not a bad thing. You know, very often, sometimes cleansing the system can help for the foundations of the future to be built on, you know, much more firm grounds.

If you look at also what's different now is that the venture funding has come from a variety of sources that we never thought was going to be true. I mean, our strategic funding round, our last round that we just closed, Bank of New York, Wedbush, other institutional players, Belvedere Trading, all joined. And that is just exceedingly different than just venture dollars flowing in.

And previous to me coming on, David Ellison, I think, made a very salient point, which is that valuations are starting to drop, and now we're looking at earnings. I think in the crypto ecosystem, definitely valuations with numerous, numerous companies that potentially did not have the earnings or the foundations to back it have been above a billion dollar valuation mark. And I think that it's time that the companies come back to reality, and that'll help for the long term.

BRIAN SOZZI: Leah, one target that we heard a lot about over the past two years during crypto-- crypto's rise is that $1 million target by 2030. This downturn we're seeing right now in crypto, does that pull that off the table? Does it push it out to 2040?

LEAH WALD: Are you asking if I can retire early or now I have to work longer?

BRIAN SOZZI: That's another way of looking at it, yes.

[LAUGHTER]

LEAH WALD: Yeah, exactly. I think that that's pretty lofty. But I do think that an adage that we say in the bitcoin world is, one bitcoin will always equal one bitcoin. As obnoxiously cheeky as that may be, the truth is just this asset class trades very differently. It does trade in certain ways in regards to technical analysis, like any other asset in history. However, it also is following very different dynamics from a fundamental perspective. So I think that we will have to see if we hit that $1 million mark or we continue going down for the next many, many years. But in the end of the day, one bitcoin is still equal to one bitcoin. So trade accordingly, and hedge appropriately.

JULIE HYMAN: By the way, congratulations. You mentioned you just come back from maternity leave. Gives you a little new perspective, doesn't it, on these things, I can say from experience. Leah, so as you're talking about this, you know, trade it as it's one bitcoin and hedge accordingly, in addition to running Valkyrie Funds, you personally hold bitcoin as well. Are you adding any bitcoin? And at what price would it become attractive?

LEAH WALD: That's a great question. I do hold bitcoin. I hold it in my cold storage so that my hands can't touch it on a daily-- sorry, large dog in the background. I do think that we're looking for buy zones. It always depends, as everyone in finance knows, on your time horizon. If we're looking at a short time horizon, I'm very nervous about these markets. And I think that we're in for a lot of pain, unfortunately, for the next few months, for sure, potentially longer. Of course, we are targeting Q4 with some sort of rebound. If you look at medium and long term, I am always bullish bitcoin. So I do think there's always a good bottom and a good buy to be had, depending on your time horizon.

BRIAN SOZZI: Always good to get some time with you, Valkyrie Funds CEO Leah Wald. And welcome back to the grind, too.

LEAH WALD: Thank you.