Here's what one billionaire thinks about crypto right now

Brian Armstrong, CEO of Coinbase, shares his thoughts on cryptocurrency and where the market might be headed.

| More on:
man standing and looking at an inclining road with the word cryptocurrency written on it and a question mark at the top of the road

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on All figures quoted in US dollars unless otherwise stated.

In early September, Coinbase Global's (NASDAQ: COIN) CEO, Brian Armstrong, appeared on CNBC to discuss his company's management of the crypto winter, his thoughts about particular cryptocurrencies, and where he thinks the market is headed in the coming months. 

Armstrong has been at the helm of Coinbase since he founded the company in 2012. Since then, the cryptocurrency market has gone through numerous boom-and-bust cycles. When Armstrong started his business, Bitcoin (CRYPTO: BTC) traded for less than $15. Today, it is hovering around $20,000, and Armstrong's net worth is believed to be around $2 billion. 

A challenging time, but there is reason for hope

Just because Armstrong is the CEO of one of the most popular cryptocurrency exchanges doesn't mean he knows exactly what will happen next in the crypto market.

But he has been around since just about the beginning of cryptocurrencies and has managed to keep his company afloat regardless of economic conditions. So when he shares his thoughts on the market today, people inevitably listen. 

In the CNBC interview, Armstrong was asked about the current crypto environment and what it could look like once it returns to healthier levels. Most notable were his comments on a transition from primarily retail investing in crypto to larger institutions now joining in.

Armstrong believes that one particular sector will drive the next wave of crypto adoption: big tech. He cited the agreement between Coinbase and the world's largest asset manager, BlackRock (NYSE: BLK).

In the agreement, the latter's investing software will integrate directly with Coinbase so BlackRock clients can purchase Bitcoin seamlessly.

Armstrong thinks that more and more companies will follow this business model in the future. Since these large companies typically have more money on hand than retail investors, he is optimistic that this influx of capital entering the crypto market could send it to heights we have yet to see. 

But until then, Armstrong's company faces an uphill battle as investors shy away from risky assets like cryptocurrencies due to poor macroeconomic conditions.

Coinbase primarily generates profits from the transaction fees it charges for trades. With less trade volume, Coinbase's profits are taking a severe hit. 

He was asked about when he sees the current crypto winter ending. He said that this one is a little different from other crypto winters in the past since it "happens to coincide with the broader macro environment coming down." He was mainly referring to rising inflation and climbing interest rates. 

Armstrong hopes that the macro environment improves in the next 12 to 18 months, allowing crypto to have a "nice recovery".

The main takeaway

Investors shouldn't hang on to every word that comes out of the mouths of billionaires, but they should consider these statements when making decisions because they may contain valuable insights.

Armstrong does have more experience in the crypto industry than just about anyone else, and his knowledge can be helpful in gaining more perspective on the sector's current position. 

Armstrong believes that there are cycles when it comes to crypto, similar to the stock market. The incredible growth that the sector experienced from 2020 to 2021 was not sustainable, and it was inevitable that some sort of correction would follow.

Suppose Armstrong is correct, and the market is in for a lackluster performance over the next year and a half. In that case, that means now could be the time for investors to take advantage of incredibly discounted prices in preparation for a return to a healthier market. 

This article was originally published on All figures quoted in US dollars unless otherwise stated.

RJ Fulton has positions in Bitcoin. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Coinbase Global, Inc. The Motley Fool Australia has positions in and has recommended Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

electric vehicle such as Tesla being charged at charging station
International Stock News

Why did the Tesla share price just tumble 7%?

Nasdaq investors just sent the Tesla share price sharply lower.

Read more »

A woman is excited as she reads the latest rumour on her phone.
Broker Notes

Goldman Sachs says this US stock is replacing Tesla in the Magnificent Seven

And no, it's not a tech company. It's in the healthcare sector.

Read more »

A man looking at his laptop and thinking.
Share Gainers

Should I buy Nvidia stock as an Australian investor?

Many Aussies are thinking of jumping on the bandwagon, but they need to think about these issues first.

Read more »

Digital rocket on a laptop.
Broker Notes

Is the Nvidia share price on course to reach US$1,400?

You betcha, says one analyst.

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Could Nvidia become the most valuable stock on earth?

Can anything stop the Nvidia stock price?

Read more »

A group of young ASX investors sitting around a laptop with an older lady standing behind them explaining how investing works.
International Stock News

What can ASX investors learn from Warren Buffett's latest buys and sells?

We've just found out what Buffett's been buying and selling recently.

Read more »

electric vehicle such as Tesla being charged at charging station
International Stock News

Why Tesla stock tanked in January

Will the electric vehicle leader see earnings decline once again in 2024?

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
International Stock News

Will Nvidia stock be worth more than Microsoft by 2030?

The graphics giant has been growing at a much faster pace than Microsoft, but can it sustain that momentum?

Read more »