CoinDesk: 'The influence of influencers in crypto is really troubling'

CoinDesk's Lawrence Lewitinn joins Yahoo Finance to break down Bitcoin's latest price jump.

Video transcript


- Welcome back. Well, let's talk about Bitcoin, because a huge move to the upside today. Briefly touching above 40,000 once again. And you can see right now, still rallying just a little bit.

Now, this all comes after a tweet that we got from Elon Musk over the weekend. And you can see it right there up on your screen. And he basically said that Tesla would accept Bitcoin transactions once again in the future.

Now, we want to bring in Lawrence Lewitinn. He's the managing editor with Global Capital Markets at Coindesk to help us make sense of these moves that we're seeing in the crypto markets recently. And I think, Lawrence, the big question here for investors coming off of this weekend is the fact that Elon Musk can move the price of Bitcoin so much. We see it jumping back above 40,000. Does that type of a move, that type of a rally here just because of what he's saying makes sense to you?

LAWRENCE LEWITINN: You know, it makes sense only in the crypto world. In the real world, in the world that people, you and I, and the rest of the world lives in in normal capital markets, it would be absolutely absurd.

Let's see what happened here. Elon Musk tweets on a weekend after a very lightly traded week in the crypto markets. Weekends are also very, very light in crypto markets. He puts out this tweet on a Sunday. And it moves the markets. It blasts through all sorts of sell orders. And it just shoots it up to 39,000 or so.

And really the influence of influencers in crypto is really troubling, if you think about it. Because that shows that the market isn't yet mature. It is a very lightly traded market still. The fact that you can have meme traders going in, and tweeting based on memes, and moving it, in other words, the way you would move GameStop, which doesn't-- you know, in the grand scheme of things, what's GameStop and all these other meme stocks? They're not large relative to other market caps in the equity space. Likewise, the fact that you could do this in crypto, you know, you look-- you step back and you go, wait, is this really the future of money?

And you know, the fact is, it might be. And, you know, obviously that's what my publication focuses on. But the markets haven't yet matured the way they should.

And there's been some fundamental news that's come out of El Salvador which should have moved the market a lot more than this.

- Yeah, and we can break all of that down. But then you get stuff like today, Paul Tudor Jones, who in his comments said, you know, I like Bitcoin. He goes on to explain why. But basically he said-- and this seems to be countering what you're saying-- that he likes consistency. It was, quote, "the idea of investing in something that is reliable, consistent, honest, and 100% certain."

So what are we missing? I mean, he's a pretty savvy investor, Mr. Billionaire Jones.

LAWRENCE LEWITINN: Sure. Well, you know, again, it's hinged on his view that inflation is going to go up considerably. And we haven't quite seen that yet in terms of how the market views it.

Now, the market has taken the 10-year yield, for instance. And it's pushed it back down to 1.5. It was 1.7 about a month and change ago. And the Fed fund futures outlook, basically traders are saying, eh, Fed's not going to raise rates any time soon. They're not worried about inflation.

Because maybe inflation isn't what we think it will-- what we in the chattering class think it will be. That's not necessarily a good sign either. That could mean that all the stimulus is marginal-- only marginally useful in the markets. So, you know, we'll be paying for that many years to come.

But we're going to have all this money sloshing around. But it's not going to create the sort of benefits and the heated economy that we expect it to. That's actually-- that's even more worrisome. And we're looking at gold prices. Gold prices haven't broken above $2,000 yet.

It is close. But it's not quite there. And it was $2,000 a few months ago. So people have sort of tamped down their views on inflation.

Same thing with Bitcoin. Bitcoin was at $60,000 a little while ago, before Elon Musk started tweeting in the beginning. And now it's around $40,0000, but it's four times higher what it was in October. And so you know, I don't know. If prices have 4X since October, maybe it's already priced in in the price of Bitcoin.

- Lawrence, just looking at institutional interests, though, overall, because that was a big talking point, what, going back six months ago, talking about the rally that we saw in Bitcoin, a lot of that driven by the institutional involvement. But it seems like we've seen that pull back just a little bit. Why do you think that is? Is that all because of the volatility?

LAWRENCE LEWITINN: Look, they knew what they were getting into to begin with, right? They know volatility is part of-- it might as well be Bitcoin's middle name. Bitcoin is a volatile asset. Institutions that are stepping into it, you know, they knew that's what they're getting into.

However, once they saw these kind of moves that happen, you know, you don't hear as much talk about it anymore, right? Because in many ways they're looking at this and they're saying, yeah, it's an inflation hedge. Yeah, it's the future of money. But like why should Elon Musk's tweets control the narrative on what's going on in the price of Bitcoin?

And I think that concerns-- you know, if you're sitting on a trading desk and you're to propose getting into crypto right now, and you go to your portfolio manager, and you're like, hey, I want to buy this. And they're like, really? You want to go into this right now? Because I don't know. Who knows. Elon Musk might tweet again.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting