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Crypto-endorsing celebrities remain silent amid market crash

In this article:
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CoinDesk Executive Director of Global Content Emily Parker joins Yahoo Finance Live to discuss how as the market sell-off continues and crypto stocks plummet, celebrities who have previously endorsed crypto have remained silent.

Video Transcript

RACHELLE AKUFFO: Well, as you mentioned there, hundreds of billions of dollars were wiped out from the recent crypto crash. Now that has some of these disappointed investors asking, where are all those celebrity voices that were promoting crypto? So before we bring in our next guest, Emily Parker, CoinDesk's executive director of global content, I'm going to have you guys take a watch of one of those ads that we saw.

- They calm their minds and steel their nerves. The four simple words that have been whispered by the intrepid since the time of the Romans-- "fortune favors the brave."

RACHELLE AKUFFO: So of course, you have Matt Damon, Gwyneth Paltrow, LeBron James, Larry David, Reese Witherspoon, just a bevy of celebrities who were front and center in some of these crypto ads during the Super Bowl and beyond. But now they're getting a lot of backlash because of the crypto crash. So, Emily, how much blame does actually fall on their shoulders for being part of promoting it?

EMILY PARKER: Not much, to be honest, because I think if you're taking investment direction from Gwyneth Paltrow, that's kind of on you, the investor. Look, it would have been better if some of these celebrities, before promoting something as volatile as cryptocurrency, put a little buyer beware warning and said, these are famously volatile. Don't invest what you can't lose. But again, I mean, this is a well-known fact about cryptocurrency. And investors do need to do their own research. So could have celebrities have been a little bit more cautious? Sure, but can we blame them for investors following their lead and making investment decisions? I'm not sure about that.

DAVE BRIGGS: Do these ads come with a warning label? Essentially, everything in American society has to be labeled with some type of warning. I guess I've never noticed it in these ads. Is there one, and are they still running these celebrity ads?

EMILY PARKER: Well, I mean, probably not right this second. I mean, but look, it's a tough question because, I mean, these-- the losses in crypto are big. I'm not downplaying them. But if you look at Amazon, for example, Amazon just lost, I think it fell 39% off of its 52-week high. I mean, are people putting warning labels on that? Yes, cryptocurrency is very, very volatile and very, very speculative. But I think we're seeing losses across the board.

RACHELLE AKUFFO: And in terms of the fear of missing out factor in this, how much is that really pushing some of these retail investors into some of these risks where they're not really looking at all the issues that come with it?

EMILY PARKER: I think, unfortunately, it is a very big factor. The FOMO factor is a big factor in crypto investment. And the problem is, is that if you invested in crypto a long time ago-- I mean, there's always people bragging about, oh, I invested in crypto many years ago-- then you would still be doing really, really well. I mean, crypto-- Bitcoin has moved up over the years. But if you invested last year at all-time highs because of FOMO because you're like, oh, I can't miss out, and you didn't really study it and didn't really look at the economics and didn't really look at the volatility, then you are probably feeling a lot of pain right now.

DAVE BRIGGS: You mentioned the celebrities. Athletes should not be off the hook. Tom Brady, LeBron James, Aaron Rodgers, Naomi Osaka, Serena Williams, we could go on and on. It is a list, a virtual Hall of Fame of athletes that have been pitching these crypto assets. In addition to these big deals, Emily, and I'm curious about that, the Crypto.com Arena, which is where the Lakers play, now is the largest deal in sports history-- $700 million to name that arena. Have you seen anything out there about some of these deals perhaps collapsing?

EMILY PARKER: No, but I mean, think about it. It's, crypto is not dead. We should not be proclaiming crypto dead. If you've been following the market for the past few years, you're quite used to this, right? Crypto moves in these crazy cycles, it's been a total roller coaster. I mean, I think last time we talked about, for example, 2020, when the price of Bitcoin dipped below $4,000. You know, it's close to $30,000 now. So this is not the end of crypto.

So I don't think now is the moment to be like, OK, I'm going to completely renounce my faith. I'm going to completely shut down these deals. I mean, there's still a lot of people who are building things, who are investing in projects, and who believe in this over the long-term. So yeah, I don't think it's-- it's too early, I think, to be-- for all these people to be going back on their-- I mean, you have-- choose a celebrity example. We had Reese Witherspoon, I think, in December, saying, crypto is here to stay. And, you know, she might still be right.

RACHELLE AKUFFO: And I want to ask you, obviously, the issues that we saw with the stablecoin collapse, you saw the CEO of Terraform Labs, Do Kwon, the company behind that blockchain that does feature Luna UST, giving this interview where he said he expected Terra Labs at some point eventually to go down to zero. So with that in mind then, what does this do in terms of how people view stablecoins? And what should retail investors look out for in terms of potential scams in this, being that there are so many tokens in this space now?

EMILY PARKER: Yeah, great point. So look, I mean, this whole Terra, Luna debacle is a real black eye on the crypto industry. I don't think there's any getting around that. And there were a lot of smart people who warned about it, who said this model will not withstand a crisis. It will not withstand the, quote unquote, "bank run." And that's pretty much what happened. So I'm just hoping that crypto will learn from this. I mean, it will probably bring about regulation faster than we thought possible.

The problem is, is that I don't think anyone in Congress really knows how to regulate algorithmic stablecoins. There's been talk of stablecoin regulation for a while, but algorithmic stablecoins are sort of a different animal. And I don't actually think they know how to regulate them yet. And they're going to have to figure that out soon. But yeah, I mean, this definitely was not good for the crypto industry.

And a lot of investors, some investors appear to have lost everything. And definitely in terms of the mainstream perception, people are like, wow, where did that $50 billion go? And a lot of people didn't even understand what it was in the first place. It seemed very confusing. It seemed overly complicated. And it turns out that it was.

DAVE BRIGGS: Like the markets, it seems pretty broad-based. Is there one, Emily, that's better weather the storm than others through all this?

EMILY PARKER: In terms of crypto assets?

DAVE BRIGGS: In terms of crypto assets, yeah, coins.

EMILY PARKER: You know, I mean, one of the things that I find a little bit disappointing is how correlated a lot of these crypto assets seem to be, that we're just kind of seeing a sea of red across the charts. And that, in some ways, goes against the principles of crypto because all these different coins are supposed to have different use cases. And they're supposed to be unique, and they're supposed to do different things. And they're all kind of performing very similarly. Not all of them, but they're largely performing very similar to Bitcoin, which is performing very similarly to the stock market.

So, look, I think there's still people who are quite bullish on Ethereum, for example. Ethereum is going to have a very important transition soon, which could be good. And I think there's a lot of individual projects. So it depends on what you think about the future of NFTs, if you think NFTs are going to fall with the market. There's some projects that are working on that that might have some future potential. But yeah, I mean, in general, we're seeing a lot of red across the board.

But Bitcoin has weathered these kinds of crises before. It's been around for over 10 years. And again, if you look at the historical cycle of Bitcoin's price chart, it's still moving in an upward direction from the early days.

DAVE BRIGGS: Better days ahead. Emily Parker, CoinDesk executive director of global content, thanks so much.