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Amid rising interest rates in the U.S. market, asset classes across the board are seeing selling pressure, and cryptocurrencies are no exception.
What’s more, events like the collapse of terraUSD’s (UST) stablecoin could be adding to crypto’s recent pullback. However, one asset manager sees the digital currency world’s rebound coming soon.
“I think in the near term, we [crypto] will find our footing,” Grayscale Investments CEO Michael Sonnenshein said on CoinDesk TV’s “First Mover.”
Grayscale, one of the largest players in crypto and a sister company to CoinDesk, has over $25 billion in assets under management.
Sonnenshein also noted that following the collapse of UST, one of the largest algorithmic stablecoins, all stablecoins remain a concern in the ecosystem even as they remain the backbone of crypto markets.
“Investors are focusing on items like stablecoin governance [and] supply collateral, and over time ensuring that the stablecoins they are involved with are in fact functioning the way they’re designed to do so,” he said.
Much to the detriment of its investors, tech stocks have also suffered low trading volumes and selling pressure. Since the start of 2022, bitcoin's (BTC) price has fallen by more than 35%.
Yet, Sonnenshein doesn't see the downturn lasting. Like many in the crypto asset world, he sees a potential for a future upside.
“I think that markets will continue to find their footing,” he said.
The Grayscale Bitcoin Trust (GBTC), Grayscale’s flagship investment vehicle that it wants to convert to an exchange-traded fund (ETF), would love to attract those investors. The company is hoping the U.S. Securities and Exchange Commission approves the conversion, although the SEC has yet to approve any ETF that holds actual bitcoin. GBTC is currently trading at a discount of around 30% of its net asset value.
Ultimately, Sonnenshein cites a “function of market forces,” including a liquidity crunch, that are contributing to GBTC's and bitcoin’s trading prices.