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Making sense of cryptocurrency trends

Yahoo Finance Editor-in-cheif Andy Serwer joins Yahoo Finance Live with a look at breaking down recent trends in cryptocurrency.

Video transcript

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- Demystifying cryptocurrency would seem to be a full time job. Andy Serwer was trying to do it as part of everything else he does and he wrote about it this weekend in his column. I mean, I was reminded about this last week, Andy, because I moderated a discussion with a company called Circle, which is a fintech that deals in the USDC, which is a stable coin, the US dollar coin. Which is just a reminder that there are so many different facets to this thing.

ANDY SERWER: Yeah. And just for instance, with stablecoins you guys, I mean, people a month ago were talking about this being something that was going to be easily accepted by the Fiat currency crowd, now it turns out maybe not so much.

And the SCC chair, Gary Gensler, was saying, well, we're going to in particular take a look at these things as something that should be regulated and set it in sort of a sheriff tone rather than a tone of someone who was just going to let these things kind of become part of our financial system. There's a lot going on. You're right, it is a full time job and it's tough to keep up.

- And so, Andy, as you were sort of looking through all of the different stories and threads on this and you also, in your column, featured some fun, some facts that we got from our Zack Guzman, you shared with the public some stuff he told us in our latest Zoom meeting. What do you think is going to be or what are going to be the most important threads to watch for the, say, remainder of the year?

ANDY SERWER: Yeah. I mean, sort of taking a step back, Julie, for one second. One of the points of the article was is that, oh, my goodness, this is such a dynamic fluid situation and this is crazy right now. Well, the point I was trying to make is that it's always that way with crypto, it has been for months and years and it will be for months and years, and maybe even decades going forward.

The two things to watch right now, but first I just alluded to, which is the regulatory environment. And that is mission critical right now and how regulators in the United States and, in fact, around the world are going to sort of bring crypto into the mainstream financial system. That's going to happen, one way or the other.

The second thing is China. China has always resisted crypto and basically been against it, if you will, they have a digital Yuan, but that's a different sort of piece adjacent to crypto. But they came out very strongly late last week saying, listen, in case you don't understand, crypto is banned in China, banned, banned, banned.

And in fact, Sam Bankman-Fried, who runs one of the biggest crypto exchanges, not coincidentally left Hong Kong last week and moved to the Bahamas. So, creating sort of this parallel universe and in the parallel universe there is no crypto is an interesting part of the evolution of this non Fiat currency.

- Hey Andy, I think another question though is how much headline risk is there to some of the surface level, things that people might be saying and seeing and saying, well, is this all just a joke? Because a stat that Zach also showed was that if you had invested $1,000 on January first of this year, it was actually Dogecoin that would have yielded the most to date. And I understand that, I haven't seen the update as of a few days but I couldn't imagine it changing that much.

It's really a meme currency. And you look at headlines like a Hamster beating the S&P 500 by picking cryptocurrencies in a basket. I mean, are these types of things helpful or harmful to the story of crypto as we head into 2022?

ANDY SERWER: Well, of course, at first blush, harmful, no doubt. I mean, and Dogecoin what was like referring to it as a currency about nothing, it does undermine the narrative. And it just makes you scratch your head because there is Elon Musk talking Doge up all the time. In a way though, I think it's actually kind of helpful and productive, Brian, because it serves as a reminder that this world is incredibly fraught and filled with charlatans and frauds.

And, in fact, the biggest returning asset piece, as you said, may be just that. I mean, the founders of Dogecoin are forthright about saying they created this as a joke, and it's a joke. So, what does that tell you about the rest of the marketplace? Well, my takeaway is, boy, you better be careful when you are moving into this area. No doubt.

- I guess either better be careful or you follow Mr. Gox, the hamster who's turning on the wheel and decisions on which tunnel to go into govern his crypto trading decisions.