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Crypto: A lot of institutional investors still 'don't understand bitcoin,' expert says

Hard Money Host and Bitcoin Educator Natalie Brunell joins Yahoo Finance Live to discuss the crypto rout, bitcoin's correlation with other assets, and strategies for long-term holders.

Video Transcript

- The volatility of the crypto market continues to weigh on crypto exchanges and platforms alike, including Crypto.com. Now, the company has reportedly pulled out of a huge Champions League sponsorship deal at the last minute. With us to discuss this and more is Natalie Brunell, Hard Money host and Bitcoin educator. Natalie, thank you so much for joining us. So we know that any time we have sort of bad news regarding crypto, it does tend to really weigh on it. But crypto has really been under pressure so far this year. What are you keeping an eye on, especially in terms of Crypto.com now pulling out of this UEFA partnership?

NATALIE BRUNELL: Yeah. Well, it's a bear market, right. We're in crypto winter. But I'm feeling more bullish than ever on Bitcoin, especially because during this time, I think those important efforts to really get the education out are really most crucial right now when we see the system at large having these liquidity issues. They're trying to raise interest rates. But we have so much debt in the system that we're feeling pain all over the board from crypto to equities, home sales slowing. And so I think it's really important to educate people on the importance of the idea of hard money. And now we have it in digital format.

- Natalie, I want to get your thoughts because yesterday we were talking about Bitcoin. We talk about it every day here at Yahoo Finance. But Michael Kantrowitz, he is a guest on the show yesterday from Piper Sandler. We asked him where he thought Bitcoin was going, at least in the short term. Let's play a quick clip from that interview. And then we'll get your reaction.

MICHAEL KANTROWITZ: We published many, many months ago that I think Bitcoin was around $40,000, that we're going to probably see it get cut in half and then some. And then we reiterated that recently. So I could easily see it falling down to $15,000. Again, this is not a long-term view on Bitcoin at all. It's purely a cyclical view with the realization that it's trading exactly like the market today. So until we see a bottom in the economy, I don't think we're going to see a bottom in Bitcoin.

- So Natalie, I know you're bullish on Bitcoin. The question I have for you, what's it going to take in order to build up that investor confidence and really see a catalyst here for the crypto market?

NATALIE BRUNELL: Well, you know what, I largely agree with what he said because we just have so much uncertainty with the system at large. And I'm not sure if the bottom was in with that 17,000 back in June. And what we really need is just more education because Bitcoin has been largely correlated with equities. It has been the beneficiary of the last decade of quantitative easing. And that's because a lot of people and a lot of institutional investors even really don't understand Bitcoin. It's decentralization. And it's true scarcity. And a lot of times, it's lumped in with other crypto. So we are very, very early.

Now, because the price has dipped-- these are prices that people wanted to see when it was $69,000. They thought it was too expensive. They were FOMOing. And they thought it was too late. So this is actually still a really good accumulation point because once you're trying to time the market and find a bottom, you're never going to be able to predict it. So I'm dollar cost averaging. I feel bullish about it in the long term. But I agree with what he said that there may be more pain in the short term, as it's part of this larger macro environment that's very, very volatile right now.

- So outside of the macroeconomic headwinds, what do you think are the biggest pressures right now on crypto?

NATALIE BRUNELL: Well, I think that the wash sales that are happening right now are adding to the volatility because there are no wash sale rules with Bitcoin. Some people are using that for tax harvesting. But others are using it to trade and to speculate. I'm not someone who advocates trading Bitcoin. I see it as a long-term savings vehicle. So what I buy I don't plan to look at, much less touch, for at least five years. But others are here to trade. And they profit on the volatility. Some people say that regulatory clarity will help. Others are very against regulation in this space. And they think that the volatility will drop as more people adopt Bitcoin and start using the Bitcoin network. But again, I think in the short term, there's going to be more volatility. And for some people, that makes them a little bit wary.

- Well, Natalie, what do you think about regulation, right, because then we also have this fraud aspect. There was a recent Forbes analysis of 157 crypto exchanges in trading platforms. They actually found 51% of crypto trades are fake. So is regulation necessary? And then if it is, what should that or could that do you think look like?

NATALIE BRUNELL: Well, I think regulatory clarity will help institutions get on board. And I think it will provide more on-ramps. But at the end of the day, I think that the regulations around Bitcoin are already pretty clear in the sense that it's recognized as digital property and a digital commodity. With that being said, I want to add that this space at large, crypto, is growing very, very quickly with companies and exchanges that are all over the world, which makes it very, very difficult. It puts up hurdles for US regulators.

I think a lot of regulators are still largely trying to understand the industry. They're trying to understand the companies, the big names that are both on and offshore, some of them offering these massive yields and other tokens that could pose large risks for investors, which we saw in the crypto contagion. And so I think this just speaks to the importance on a retail level of really knowing where you buy your Bitcoin, who you're buying it from, and the idea of educating yourself on self-custody, where you can become your own bank, take custody of your Bitcoin, and be in full control of your asset and investment.

- And to that point, a lot of people wondering, they say it's the person who holds the keys that really should be in charge of the Bitcoin. So sometimes when you do have things like a Binance or a Coinbase or something else, you do open yourself up to risk. But I want to ask you about this US federal prosecutors asking Binance, the world's largest cryptocurrency exchange, to provide some of these extensive internal records tied to money laundering. When it is the biggest exchange that's under this sort of scrutiny, how much does that hurt people's adoption of Bitcoin going forward?

NATALIE BRUNELL: Again, I don't think that it hurts it in the long term. I think that, again, regulators are trying to understand the industry. And they're trying to get records from companies that are all over the world, which poses some challenges. But it's that saying that we have in Bitcoin where a knife can be used by a surgeon, but also a criminal. Look, money is going to be used for both good and bad no matter what format it comes in. And I think, overall, because we live in a digital world, we're going to soon be adopting digital money. And Bitcoin is hard money.