S3 E7: Looking Beyond the Crypto Credit Crisis of 2022

Channel 11’s Ken Shinoda welcomes Hunter Horsley, co-founder and CEO of crypto index and ETF provider Bitwise Asset Management, for a deep dive into the crypto space and the tumultuous year it has been experiencing. It’s “always fun to talk about the craziness of crypto land,” notes Mr. Horsley, who begins the conversation with an explanation of the burgeoning crypto space (1:08) that draws a comparison to the history of the development and adoption of the iPhone (5:34). Messrs. Shinoda and Horsley then get into the volatility experienced in crypto assets in 2022, a period Mr. Horsley splits into two quarters (15:55). The first quarter story for crypto was the story of macro with interest rate hikes and liquidity being pulled out of every asset class. The second quarter brought the Crypto Credit Crisis of 2022, a self-inflicted wound on the space, according to Mr. Horsley, and a period in which crypto experienced its versions of Long-Term Capital Management, Lehman Brothers and Archegos. With the use of a timeline chart (19:07), he reviews the major events of the second quarter volatility (that stretched into July) beginning with trouble at Terra and on into Celsius’ bankruptcy filing. Ultimately, Mr. Horsley says, the Crypto Credit Crisis resulted in a lot of risk washing out of the sector.

Next, Messrs. Shinoda and Horsley get into the long-term outlook for crypto (33:30), which Mr. Horsley notes has been around for a little while now and has experienced four-year cycles: three years of bullish returns and one year of drawdown (34:05). Mr. Horsley lays out the progress the space has undergone in that period, which he sees as positive and wouldn’t be taking place “if there’s not actually a there there.” Mr. Horsley also breaks down the outlook into three factors to track (41:47) – macro, industry and asset – with him noting regulation as the “single most bullish catalyst that could possibly take place.” The two conclude their conversation with a talk on crypto asset allocation (58:31). This episode was recorded Aug. 2, 2022.

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