Steve Ehrlich, Co-Founder & CEO of Voyager Digital, breaks down the economic factors impacting Bitcoins performance and outlines ways to hedge against rising inflation. 

Opening Bell

Bitcoin Drops to 2-Week Lows as Investors Look for Safe Havens

here to talk more steve ehrlich co founder and Ceo of Voyager digital steve We know Bitcoin has been trading between 29,065,000 for the past year that's quite a difference. Does Bitcoin have the store of value like other assets that we see traditionally hedged upon during a time of uncertainty like this. Well thank you for having me today. I definitely believe it does. I just think the the time we're in right now where there's more than one force of inflation as you mentioned the geopolitical environment we're in right now with the effect of war going on between Russia and Ukraine changes a little bit of the short term dynamic of Bitcoin and I think though there's still value proposition of Bitcoin is an inflationary hedge but you do now see because it is something that is a global currency, a global asset that you are seeing some effects of that geopolitical Realm and over time I think over more time remember bit cliched only been around 11-12 years so over more time that takes the place and really does become digital gold. That's a really good point. You don't necessarily think about the time it takes the on ramp and asset like this. So pointing out that context we know Bitcoin and other tokens have been reactive to the geopolitical tension and economic news recently, why are we seeing the crypto market moving in near lockstep with equities. Yeah I think right now what you're seeing is that it's very much a risk off trade that anything that has more risk associated to it, people are actually selling off and holding cash and in our case we've actually seen consumers hold usd see coin Rusdi see balances Have more than doubled over the last 6-8 weeks and what that really means because I've seen this before, 20 odd years ago when we had the bubble crash and the internet and everyone sold their stocks and then held the cash at the broker I was at, you know, it sets you up to actually buy when the markets recover. And I think that's what we're saying, we're not seeing assets leave digital assets, they're staying with us dc because they're waiting for the opportunity to participate again and then re buy and re enter the market. It's just a time where everyone wants to see what's going on again, multiple factors in the global economy right now between war and inflation now there's more than one factor that is a heavy duty factor that you didn't expect to see all at once And Steve of the top 100 tokens. There are about seven on chain projects above 10% this month. What does this signal to you? Is it a signal of weak platform, development and interest or is this a result of the overall exit of cash from the crypto market due to the selling cycle you just mentioned and expecting re entries at some point. Yeah, I definitely think it's the latter. I think people will reenter I think, you know, that that risk of trade is across everything right now and people are, there's a flight to safety and that flight to safety as long as the assets aren't leaving platforms and going elsewhere, they're staying there ready to be deployed. And I think once you see some more certainty in the world you're going to start seeing those assets get redeployed. There's some great protocols that will be the future of technology and will be the future of not just finance, but the future of smart contracts and everything. We do that get redeployed just a timing thing right now and I believe it's a short term, you know, a few months things that we're working with right now at this point. How do you think investors are weathering the drops that we're seeing in the crypto market? And where do you see the hedges within this asset class? Yeah, there's, you know, I think there are some, you know, some consumers that are more adept at the defi protocols are putting their assets into, you know, some defi protocols that they can earn, some, some yield on, Some are just holding some of the coins on platforms like ours where they can get some rewards just for holding and being part of our a loyalty program, a rewards program. So I think people are looking at the opportunity to get some yield off those assets today, some of the defi protocols and some of the assets we hold, you can actually outpace inflation by holding them with us. I think you're seeing even though there's volatility, there's a holding going on to try to generate some yield. Are there other projects in terms of Blockchain where you see people making investments at this point as well? Well, you haven't really seen a slowdown of the venture capital firms putting money into some of the protocols, whether it's something like avalanche of al Durant of solano, that money keeps coming into those protocols because there is an opportunity for the future with these. As I mentioned that there was a great ad 20 something years ago by Oracle in the Super Bowl that talked about them being the technology revolution of the future and being the technology to power the internet. Some of these protocols can replace oracle in a lot of ways and be the future of the economy because they are going to power on top of the internet and drive more efficiencies in the markets. And it's a great comparison Because you're, you're advancing technology, technology has advanced so far in 25 years that we can use Blockchain now to really make our lives easier and more efficient. And I'm seeing money come in from from venture funds, private equity funds into a lot of these protocols. Yes steve in the here and now we've been covering the Russia Ukraine crisis really throughout the morning and last night. So I do have to ask you, of course this is a reactionary um response that we're seeing from investors at this point on crypto. But in the short term, what do you think people should be paying attention to? We know that escalating tensions could result in supply chain issues. A lot of those impacting the energy sector and this these processes on the Blockchain with crypto are really energy intensive. How do you anticipate some of this reaction to play out? Like I think what people need to do is pay attention, right. I think the first thing he said is what should they do? Pay attention, Watch your portfolio, be comfortable in what you're in right now and what you're investing in and if you're uncomfortable then hold your money into a U. S. D. C. Stable point or a dollar and then reengage later on. But I think you should look at the projects that will have a long term horizon two and that's what we've been focusing on and having a lot of conversations with our consumers take a long term approach. This isn't about the immediacy, this is about a long term approach to changing the world with Blockchain technology. So don't look at it as the immediate trade. Look at what you're wanting to accomplish from investing goals over a long term. That's really important because there are things that always that will happen that add volatility to a market whether it's the traditional markets or Cryptocurrency, but it's what's your long term goals and you know, these projects and a lot of good ones will be valuable over the long term. Yeah, I think a really important note for investors, especially those newer to crypto that are looking for kind of get rich schemes and flipping really quickly that steve Ehrlich, co founder and Ceo of Voyage or Digital, really appreciate all that insight.