Bitcoin's rally proof of a 'very sustainable recovery'

Bitcoin (BTC-USD) is traveling on multiple roads to redemption as it remains in striking distance of yet another record high after its tumble back below $69,000 — a level not seen since November 2021 — on Tuesday. The cryptocurrency's rally may be far from over with crypto being at the top of many people's minds ahead of major events for the space.

Pantera Capital Portfolio Manager and Crypto Asset Manager Cosmo Jiang discusses volatility within bitcoin's recent rise at a time when investors are finding more exposure to digital assets.

"It's important to realize that digital assets are a lot more than just that [bitcoin]. There are 400 tokens with more than a $100 million market cap," Jiang tells Yahoo Finance. "And as the next cycle gets underway, we believe that and we've seen over the last few cycles that the other coins outside of bitcoin really can outperform by many multiples during the different phases of the bull market."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

BRAD SMITH: The crypto rally in full swing here. Bitcoin rising more than 50% so far this year, briefly cracking that $69,000 level Tuesday. The cryptocurrency now hovering around $67,000.

So how can investors play this rally? Here with some answers, we've got Cosmo Jiang, who is the Pantera Capital portfolio manager liquid strategies. Thank you so much for joining us here today, Cosmo. First and foremost, for people who are trying to figure out if this is now the right time to dip the toe into this crypto rally, what would you say to them?

COSMO JIANG: Yeah, for sure. Well, first, thanks for having me. I'd say step one is really just go from 0% to 1%. You know, if we look at-- Coinbase has done a survey recently, and they've discovered that roughly 20% of Americans own crypto. So there's actually a lot of people who are at 0% right now. And it's going from 0% to 1%, you can do various portfolio allocation strategies. It shows that there's actually a huge increase in your portfolio performance and Sharpe ratio over time. So that's probably step one is for those who are on the sidelines, start learning about it and consider going from 0% to 1%.

Step two is probably just understanding what else is out there, right? The investment universe in crypto is quite wide. While some investors' journey ends at Bitcoin, it's important to realize that digital assets are a lot more than just that. There are 400 tokens with more than $100 million market cap. And as the next cycle gets underway, we believe that-- you know, and we've seen over the last few cycles that the other coins outside of Bitcoin really can outperform by many multiples during the different phases of the bull market.

SEANA SMITH: Cosmo, I'm curious how you looked at the price action that we saw yesterday. Heavy selling in the middle of the day. We're looking at some relief here today. But really what that signals about the momentum or the volatility, I should say, that we'll see in Bitcoin going forward?

COSMO JIANG: Yeah, no doubt. This is an early stage tech asset, basically, and so there is a lot of volatility in these assets. I would say that, especially as we get closer to the $69,000, which is sort of the all-time high for Bitcoin, it's a very key psychological level. We saw when we hit that yesterday, it sort of rejected off that and pulled back pretty sharply because we saw a lot of people have leverage build up sort of into that moment. And then when that moment sort of disappointed and didn't break through that key technical level, you know, it sold off, and that sort of feeds onto itself.

I think what's really interesting to see, though, is that that pullback, while severe, was really very short lived. If your time span is more than, you know, 24 hours, like, we're almost back to very close to recovering from that moment. And it just shows that there is a very strong demand for this product. There's very strong demand from a wide variety of investors. And so this rally feels at least like a very sustainable recovery.

BRAD SMITH: And so as you look down the list and kind of really consider the entire coin market cap out there, you've got Bitcoin. You've got Ether, which itself is going to see some applications for ETFs this year as well. Some of those applications already being started. And then you've got Solana. And you go further out into the spectrum. You can get into the meme coins. You can get into the other crap coins, as they may call them or as I will kindly call them here. You know, where should investors be aware of some of the other opportunities versus what is fading fast or just on momentum itself?

COSMO JIANG: Yeah, absolutely. Look, at Pantera, we're very long-term investors. A defining thesis for us really is that tokens are a new form of capital formation. A lot of businesses will never have a New York Stock Exchange-listed equity. They will only ever have a token, and that's how they align incentives with management teams, employees, token holders like ourselves, as well as-- token holders being the equivalent of shareholders-- as well as uniquely to digital assets users. So it is a very fundamentally revolutionary form of capitalism and capital formation.

Our strategy then is really-- it's going to sound very familiar to those who invest in traditional equities or traditional equity hedge funds. Really, the core of our strategy is finding tokens that represent protocols with real product-market fit, strong management teams, a business model that makes sense, and a path to attractive and defensible unique economics. I think the key misunderstanding is that people don't realize that there are a lot of real businesses with real revenue being generated in this industry, and they're represented by tokens.

SEANA SMITH: Cosmo Jiang, Pantera Capital portfolio manager and crypto asset manager, thanks so much for joining us here this morning.

COSMO JIANG: Great. Thank you.