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As the U.S. economy returns to pre-pandemic highs, Bitcoin’s value is up 60% year-to-date. Yahoo Finance’s Dan Roberts joins The Final Round to break down why Bitcoin and Altcoins are making a comeback this summer.
MYLES UDLAND: Bitcoin is having a nice year, but also the altcoins are getting involved. You opened your story today by saying you'd be kind of forgiven if you thought it was 2017 in the crypto market. I mean, it's not that crazy, right? This is more muted. But there certainly seems to be some froth coming in over the last few weeks.
DAN ROBERTS: Well, absolutely. It's more muted. And in some ways it makes a little more sense, right? I mean, the thought on Bitcoin and cryptocurrencies, Myles, has always been that it's a hedge against larger uncertainty.
Now, at the very beginning of the pandemic-- or I shouldn't say in the beginning, I should say the beginning of when it really started to hit the US in the first two weeks of March, and March 15 is the date that widespread closures really began-- Bitcoin at first crashed big time, along with stocks. And now it has rebounded, as have many of those tech names. Of course, the NASDAQ up the most of the major indices so far in 2020. But now it has more than rebounded, with Bitcoin up more than 60% on the year.
But the part that feels more like 2017, it isn't the shock and awe of the fact that Bitcoin's up, because that has a little bit of logic to it. It's those altcoin names. Or there's another less-kind name for some of them, right, that rhymes with Bitcoin and starts with an sh. Many of these crypto currencies are things that either you've never heard of, or then when you do a little bit of homework, you say so what's the purpose?
And you have to think that a lot of people buying them, they're not buying them because they've done their homework and research on the project behind the coin and they think that the company or project or blockchain app, decentralized app, or dApp, will be successful, and thus, they're buying the coin. They're buying it because they think the price is going to go up, and they're going to keep paying attention and watch closely every day, and then try to sell and get out and get some cash off the table. So in some ways, it's alarming to see those names.
Algorand is up 200%. Dogecoin is up even more than Bitcoin is in 2020. Well, what is Dogecoin? It's nothing. It's based on the Doge meme. So in some ways, that's alarming.
But, of course, when you talk to crypto investment firms, they say, well, there's more good than bad right now. And we think it's that a lot of people are looking to crypto as a hedge, especially when the Fed and stimulus help is coming and they're printing more money. And people see Bitcoin as a better asset because it has a finite, fixed supply. I don't know how much you want to buy that argument, because, of course, the same people saying there's some good things happening are there people who have to shill it and want to shill it and have to believe that good things are happening, because they run crypto investment firms.
But it's all very interesting. And you have to wonder if at some point it hits a peak. If the bump right now for crypto prices is really due to the pandemic, then what happens in two or three months as we really start to see more re-opening? What about when schools start to return? I know many won't return. But will you see the surge and the action in crypto hit a wall at that point?
JARED BLIKRE: Great article, Dan. I just wanted to-- it made me think about 2017 all over again, because it's been a long time since you and I did those Crypto Corner hits under the stairs with Jen Rogers. But just thinking back, cryptocurrency was still in its relative infancy as it gained traction among the retail-investing public.
So many exchanges were broken. The price of transactions was skyrocketing. There wasn't institutional framework. But all of that kind of exists now. I think that's much more supportive of the price going forward.
So just sticking to Bitcoin, we'll take a look at a five-year chart. Here is that peak in 2017. And we have now definitively broken through the negative trend line.
And we're breaking to the upside. So $12,000 is a resistance level. But I see this as having a long ways to go, given the fact that we basically consolidated for a couple years.
And just one other difference-- we don't have the near-- we don't have that retail frenzy that we do now. The only time I ever got recognized on the Street was when Bitcoin was at multi-thousands-- $10,000, $12,000, $18,000-- it doesn't happen any more.
DAN ROBERTS: Well, and Jared, you talk about institutional interest. I mean, look, no further than Paul Tudor Jones, saying that he has put 1% to 2% of his hedge fund's assets into Bitcoin and that he thinks it's a great speculation. I mean, I always hesitate to make too much out of just one Main Street Wall Street type saying that-- or, I should say, mainstream Wall Street type saying that. But I do think that when you Paul Tudor Jones said I like Bitcoin as a speculation, I think that really can change minds on the institutional front.