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Bitcoin hovers around $43K as China sends shudders down markets

Yahoo Finance Live breaks down the market action for Bitcoin and other cryptocurrencies as China fears weigh.

Video transcript

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JULIE HYMAN: Let's talk more about the moves in crypto yesterday coming into today. Our David Hollerith is with us now, our crypto reporter. And David, to me, what we saw from crypto yesterday sort of lends once more to the debate about whether, A, cryptocurrencies are any kind of haven and, B, whether they're correlated with other assets. And to me, the answer to both of those things is no. I don't know what you're hearing from your sources on that.

DAVID HOLLERITH: Yeah so all cryptos were down yesterday. And Bitcoin actually fell the least but is now, in the AM, it's recovering the slowest, it appears. Ethereum's up 2% from yesterday.

But going back to yesterday, Bitcoin fell more than 7%. And it's below 44,000, still below 44,000. And yeah, so the big narrative around Bitcoin, one of the big narratives-- and again, these sort of stories about what the asset is supposed to be, it's constantly changing. It's a very new asset class. But Bitcoin serves as a good safe haven, stored value asset.

Now, as something like an inflation hedge, digital gold, it's the same idea. And when we see a move like this, what we assume is following what's coming out of China that's sort of spooking the markets, I think we can look at Bitcoin's behavior, and all cryptocurrencies, and assume that they're risk-on assets that are behaving like equities.

Now, a few of my sources I spoke to have said, yes, while Bitcoin does behave like risk-on assets from time to time, this is not always the case. So an example would be back in March, 2020 from the onset of the pandemic when the stock market went down. All cryptocurrencies went down too. But they recovered slightly faster. So that's what proponents are sort of looking forward to say maybe it's going to be more uncorrelated in the future.

But right now, what we're looking at is pretty much-- it's the same thing. It's behaving like a risk-on asset.

EMILY MCCORMICK: David, another crypto-related story we're watching today is on Coinbase. Now, the stock isn't doing too much right now, trading right near the flatline after yesterday's 3 and 1/2 percent drop. But the company is also dropping plans to launch Coinbase Lend, an interest-earning product. What's the story on that walk-back?

DAVID HOLLERITH: Yeah, and so this follows a bunch of friction that has been happening between the SEC and Coinbase publicly after Coinbase's CEO Brian Armstrong, two weeks ago, sort of tweeted about reaching out to the regulator to ask for guidance for their lending service product and was very quickly told, no, you can't do this. And in Armstrong's words , they were treated in a sketchy way.

So one interesting thing to note here is that it was also discovered last week that Coinbase has taken a contract with Homeland Security to offer blockchain analytics services to the federal agency. So it is kind of interesting because Coinbase appears to be working with another regulator while they're having all this friction on the other side.

But I mean, as far as the SEC is concerned, it sends a pretty interesting message to the cryptocurrency space, which is that, some of these companies, at least the ones that are trying to work with regulators, will listen to the SEC. And that's very helpful for the regulatory agency that's trying to take a more active role right now. And it also asks Congress for more resources.

JULIE HYMAN: So David, I also wanted to ask you about another maybe product offering from another trading company, and that is Robinhood. There was a report that they are considering introducing a crypto wallet.

DAVID HOLLERITH: Yeah, yeah. I saw the report. It came from "Bloomberg" yesterday. And it is pretty interesting.

So right now on Robinhood, you can buy and sell cryptocurrency, but you can't actually move it off the platform. So there's a lot of limited functionality right there. So customers of Robinhood have been asking for a crypto wallet for a while. So one would think they have been thinking about this for a while. But as far as what the wallet will look like, what the launch plan is, we don't really have more details yet. But we're definitely actively looking at that.

JULIE HYMAN: We'll look forward to hearing more about that. Thanks so much, our David Hollerith talking crypto for us this morning.