Decrypt Editor-in-Chief Dan Roberts on crypto regulation: People in the bitcoin space are very optimistic that SEC Chair Gensler will look kindly on a bitcoin ETF

Decrypt Editor-in-Chief Dan Roberts joined Yahoo Finance Live to break down Binance's continued regulation headwinds and what's next for cryptocurrency.

Video Transcript

EMILY MCCORMICK: Welcome back to Yahoo Finance Live. The roller coaster ride for Bitcoin continues. Bitcoin's trading about 1% lower today, holding around $32,000. But for more on the action in the major cryptocurrencies, we're bringing into the stream Decrypt editor-in-chief Dan Roberts. Dan, it's been a tough month for investors holding Bitcoin and the other major cryptocurrencies. Prices have come down, and trading volumes have also come down. Is this all about the mining crackdown in China, or what's behind this latest batch of volatility?

DAN ROBERTS: Well, Emily, good to be back with you. I think the mining crackdown in China is probably top of mind. That is number one. But I always like to say when you're seeing the roller coaster in crypto prices-- and we have seen this route continue. I mean, we saw all-time highs for Bitcoin as recently as April. Let's not forget that. But since then, that three-month chart is very ugly. It's never just one thing.

So China has cracked down on mining. And a lot of crypto companies in China are looking elsewhere. That is definitely driving the price action. But you've also got recent regulatory news about banks and countries cracking down on, say, Binance, which is the biggest exchange in the world. It's bigger than Coinbase, which a lot of people don't realize if they're in the US and they think of Coinbase first.

And almost every day now, you have a different bank come out and cut off deposits to Binance or a different jurisdiction come out and clarify Binance isn't licensed to do business in our country. Binance and its flighty CEO, CZ, they say, well, we have no headquarters. And that's one way that they dodge regulation. I think that news and that continued kind of negative narrative about Binance is also adding to negativity in the space.

And then, of course, you have to mention Elon Musk. I think there's been a big overhang from his 180 on his views on Bitcoin and him raising the alarms about the environmental concerns about mining. A lot of these big mining operations are really being criticized for the amount of energy they use. And I think all of this kind of adds up to just more negativity in the water.

But that doesn't mean that you won't see a return. I mean, some of this might be summer doldrums. If you look at volume on exchanges, it is very low right now, meaning that most people who hold crypto are just holding on to it. People aren't actively trading. And that might suggest that soon, you will see some more action on the biggest exchanges when people do start either buying in or selling if prices rise.

ADAM SHAPIRO: Dan, I'm glad you brought up the issue of volume because with equity markets, sometimes when you have light volume, clearly, people are sitting on the sidelines, trying to figure out what they're going to do next. But when you look at Bitcoin, it's down today. But it's still at $32,467. It doesn't seem to me like there's a route, and we've got to get out of this market.

DAN ROBERTS: Yeah, look, I think that's fair to say. I'm always hesitant even to seem too bullish. Because, you know, at Decrypt, we are kind of very aggressively neutral. We aren't necessarily trying to pump these coins. We just cover the news in the industry. But I think you're right. I mean, you said it. If you zoom out and look at the line for Bitcoin, you can zoom out either and look at the last year or the last two years. Or you can look at the entire timeline of the 11 years it's been trading. It's mostly up and to the right.

But I think when there are major corrections, they're very dramatic. And so you have people that point to this space and they say, oh, it's so volatile. It's so volatile. I mean, it's gotten to the point where a 5% move in one day doesn't really mean much to people who have been in this space for a while. It's like, oh, it's a shrug. But then sometimes you see a 15% move in a couple of days. You say, oh my goodness.

But I generally think that people look at prices. And they just reiterate what they already believe. If they think that Bitcoin is either stupid or not interesting to them or too volatile, they look to the price action recently, and they say, this is why I stay away. And the people who believe in it long term say, this is all OK. Look how much it rose in the last year. It's just a little bit of a correction since the all-time highs. And it'll come back again.

So people tend to just hold on to the beliefs they already have. And then people like Nouriel Roubini just keep screaming, it's all a scam. It's a fraud. But you're right. I mean, it is still way, way up from where it was in 2017, the last time we saw this level of a frenzy like we saw during the pandemic with crypto.

EMILY MCCORMICK: Well, and Dan, of course, you brought up 2017. And I'm wondering, you know, we have been seeing these multi-year cyclical patterns with Bitcoin. Do you think we're heading into one of those periods right now, you know, that sort of early 2018 to the start of 2020 period, where Bitcoin didn't necessarily do a whole lot or make new highs? And then we may have to just wait this one out for a couple of years potentially.

DAN ROBERTS: Well, Emily, I mean, everyone remembers that in early 2018, after the big run-up at the end of 2017, Bitcoin fell, like, 65% in a month. It was around February of 2018. And then we went into what we in the industry refer to as crypto winter. And, you know, prices stayed really stagnant. There wasn't much excitement. People who already didn't like Bitcoin were able to shrug it off and say, see, it's all stupid, and it'll never come back. And then look what happened. I mean, it tripled during the pandemic.

So what's about to happen next? Well, first of all, I say don't believe anyone who claims to know what's going to happen next with prices. It's anyone's guess. It could shoot back to 60,000 or higher. Or it could sink even lower. That's always a concern. That said, we do talk a lot about resistance levels in this market. And now we're hovering back around the 30,000 mark. 35,000 is seen as a new kind of resistance level. And if you were to retest that, you might see it take off again.

For a while, when it got as high as 50,000, 60 was seen as a real resistance level. We broke through that in April very briefly. And then we had the big sink that has really remained. So it's anyone's guess, but you're right. I mean, people in this space think that come fall, we might really see a return here. Or we can enter a kind of long period where it just remains kind of flat and unexciting.

ADAM SHAPIRO: I'm hearing the theme to the Jeffersons, Moving On Up, as I'm looking at your new office. Not so new anymore, but you've definitely moved on up, the editor-in-chief. But I got to ask you, you know, Washington can really screw it up with regulation because they may not understand cryptocurrency. So in your coverage at Decrypt, is there someone on Capitol Hill who does get it? Because it looks as if there's going to be, at some point, a focus back on these coins and these cryptocurrencies.

DAN ROBERTS: Well, Adam, regulation is one of the biggest questions in this space right now. It's one of the most interesting stories. We do have people who kind of live on Edgar, so to speak, and are always looking at regulatory filings.

I guess, the thing I'd point Yahoo Finance viewers to, first of all, is that, you know, President Biden has chosen a new SEC chair, Gary Gensler, and that a lot of people in crypto are very, very optimistic that Gary Gensler is going to be friendly to crypto regulation, that he is likely to approve a Bitcoin ETF in the US, which the SEC hasn't done. Mostly the reason they think that is because Gensler is a crypto expert. And he taught a course on crypto and blockchain at MIT.

Now what I say to that is, it's possible. But just because he knows about crypto doesn't automatically mean that he likes it and that he's a fan. But boy, people in the Bitcoin space are very optimistic that he will look kindly on a Bitcoin ETF, which a lot of investors and Wall Street types think that once that happens, then Bitcoin will be off to the races. Because you'll have a way for regular people who are afraid to actually buy crypto to get exposure to it on the public markets.

We'll see, but that's just one example of all the regulation to come. I mentioned Binance earlier. People like Senator Elizabeth Warren really want some more strong safeguards on those wild west crypto exchange sites.