Bitcoin sell-off: ‘I am not a buyer’ yet at these levels, market strategist says

The Strategic Funds Managing Director Marc Lopresti joins Yahoo Finance Live to discuss bitcoin falling below $25,000, crypto companies pausing withdrawals, and the outlook for the crypto market.

Video Transcript

BRIAN SOZZI: Bitcoin prices are getting whacked today as the equity market selloff hits crypto. This weekend alone saw $150 billion wiped off the value of the crypto market, with other cryptos like Ethereum also slipping into the red. Joining us now to discuss is the Strategic Funds managing director Marc Lopresti. Marc, good to see you here. Are you a buyer of crypto at these levels?

MARC LOPRESTI: No, not yet. I'd like to be, but unfortunately, at these levels, I'm not a buyer. There is some margin calls ahead if we continue to see Bitcoin lose ground at 23.7, as we are going live here right now, at its worst levels since around December of '20. But I am not a buyer, is the short answer to your direct question.

BRAD SMITH: What's the next level that you believe Bitcoin might hit, specifically as there are some of the calls out, their margin calls that start to kick in around 21,000?

MARC LOPRESTI: You're referring, of course, to Michael Saylor's very known margin call at 21 K for MicroStrategy. I understand that there are some other smaller players that follow it on that also have margin calls and base margin calls around the 21, 21 and 1/2 level, even at 22. So that's what I'm worried about. I'm not so much worried about 21 just yet. I'm worried about below 23, 22.5, and then that snowball rolling down the hill. Selling begets selling, as we know, especially in margin call situations.

JULIE HYMAN: Hey, Marc, I know you have a background in securities law. And we were talking earlier about the Celsius situation. Also Binance has paused trading of Bitcoin. It doesn't seem to-- I haven't seen anything that indicates they've started again yet. Is there anything on the table in Washington that would protect investors in cases like that? Or is-- I mean, because we know there's some legislation out there that's been proposed, but would that actually change anything?

MARC LOPRESTI: Yeah, so that's a great question. And I suspected you might bring up my former career as a securities lawyer, given everything that went on. Yeah, so I got the email from Celsius last night at about 11 o'clock. We were already in a very bearish situation in Bitcoin and crypto into the weekend. That just accelerated things. And we are still waiting to see what's going to happen with Binance.

Binance, of course, telling folks it's a stuck transaction that should have been cleared up-- first, I think they said 20 or 30 minutes. Then they said soon, people are really worried that there may be something else going on with Binance. I don't have any information to the contrary that they're not telling the truth. But Binance, though, arguably the largest platform in the space, if they have a fundamental structural problem, we are going to see additional bearish price action in Bitcoin, all the rest of the crypto.

To your question, is there anything in Washington currently, legislative wise? No. There's the SEC that can enforce the securities laws, although we still have to determine what these things are. Bitcoin, of course, we know it's a currency from a regulatory perspective, but the rest of crypto is at fish or fowl. Is it a stock? Is it an equity? Is it a security? Is it a future? Is it an option? All to be seen.

On the table now, of course, the Lummis, Gillibrand bill that was put forth on Wednesday of last week. One of the most thoughtful and comprehensive approaches, but that's got a long way to go and, certainly, lots of roadblocks in a divided House right now. So I don't hold out hope that there's going to be some regulatory magic wand that's going to fix all this.

JULIE HYMAN: Marc, it's my understanding, a lot of your investment in the space is sort of through VC investments, et cetera. But in pure crypto, I mean, as you talk about Binance, as you talk about Celsius, do you have any money that you've invested through these platforms? I mean, you said you're not buying--

MARC LOPRESTI: No.

JULIE HYMAN: --at these levels. Are you holding at these levels? And are you are exposed to any of this stuff?

MARC LOPRESTI: Well, so look, so I am exposed in crypto. And in the crypto fund that I advise, we've been in 80% cash for a while now, actually, just because of these choppy waters. We're always watching to see where the whales are. We're watching to see where the margin calls are, where the buying is. A lot of traders I spoke to this morning, very busy morning, talking about if we get to 19, if those MicroStrategy margin calls happen and we see it come down to the 19,000 level, that people are going to-- one trader said, well, I'm going to, quote unquote, "back up the truck." We'll see.

A lot of times, I get a lot of market signals from that trader talk, guys that are watching the tape all day long. I didn't have any personal money, nor does the fund have any money, on Binance or on Celsius. We use other platforms-- I won't say who. But we're not directly exposed to either of those situations, nor to the Terra or Luna situation with, of course, Binance facing a class action lawsuit, having alleged to have misled investors about the nature of Terra.

BRIAN SOZZI: Marc, are we seeing, just given the route in crypto, the total market cap-- let's just make it simple for folks out there. Are we seeing a complete loss of confidence in crypto as a future investment vehicle?

MARC LOPRESTI: No. I think the short answer to that is no. You've got too much institutional adoption. You have too much institutional money in the space. What we have happening now-- and I say this a lot, guys-- this is still a nascent industry. It's still early. It's still a risk asset, including Bitcoin. And in any nascent emerging asset, you go through a maturation process.

And that maturation process includes flushing out-- and it's painful when it happens-- but it includes flushing out the weaker market participants, whether we're talking protocols, whether we're talking exchanges, whether we're talking staking platforms. This is-- and I know it's hard for me to say this, as painful now as it is for a lot of other crypto investors-- this is a necessary part of the process for this asset class to evolve, but it is not going away.

JULIE HYMAN: You are not popping that giant champagne behind you any time soon, Marc. Thanks so much. Good to talk to you, Marc Lopresti, Strategic Funds managing director. Appreciate your time here this morning.