Crypto markets saw some relief Thursday as Bitcoin jumped above the $20,000 mark to hover near $21,000 a token, as Ether and other coins broadly followed suit and traded in the green. But is the relief only temporary? Anxiety is still spreading as more firms announce their exposure to crypto hedge fund Three Arrows Capital, which has filed for bankruptcy. Charlotte Principato, Financial Services Analyst at Morning Consult, joins Closing Bell to discuss the state of the crypto market and what investors should keep an eye on. 

Closing Bell

Bitcoin, Other Coins Trading Higher Despite Broader Market Anxiety, Firm Bailouts

while crypto is broadly looking better today. Bitcoin has lost roughly half its value year to date and anxiety is growing worse as firms become insolvent or need bailouts from other crypto firms like we were just discussing a handful have been exposed to bankrupt three arrows capital and the extent of the impact that firm has had on the industry is still unknown. What should investors be keeping an eye on as Kryptos Wild ride seemingly grinds to a halt to talk to us about that is charlotte. Principato financial services analyst at morning consult charlotte. Welcome to the show. Let's talk about Bitcoin still near the $20,000 mark in the green today, which I haven't seen in a few days our market conditions improving or is today's sentiment temporary. We can't deny that there's been some good news today Celsius repaying its maker loan the news of the merge update coming to the ethereum Blockchain. I think that's what's been sort of improving the price of Bitcoin and ether specifically. I think that it's, we don't want to jinx anything right. It's always too early to say. And if if the past is precedent, there are more volatile times ahead. But what I think it really means is that the patients that we've seen of crypto owners is paying off and what I mean by that is we were in the field at morning consult surveying crypto owners as terra usd collapsed as Bitcoin dropped below $20,000 for the first time and crypto owners told us that they are staying the course. So if anything, I think this is a good day for those crypto owners who practice the hotel hold on for dear life mentality and and they're they're still remaining hopeful. So we also mentioned how SaM Bank Manfred has been bailing out firms facing insolvency or other issues. What should investors and firms like be watching out for as these bailouts are apparently needed. I think when we take a step back the biggest thing to look for is to pay attention to which platforms are doing a lot of this crypto lending the ones that are offering too good to be true yields on crypto. It is too good to be true. That's what we're finding out and that's where a lot of this exposure comes from. The other thing that we're seeing in our data actually is crypto owners are realizing this and there's been an increase in the share of crypto owners that are moving their Cryptocurrency over to a hard wallet. The phrase is often used not your keys, not your coins. When you hold your Cryptocurrency on an exchange, it means that somebody can lock it up and you won't have access to it, which is what's happened to the folks that that were were using Celsius for example. So what I think crypto owners and investors should do is have a hardware, hardware wallet ready, know the keys to your crypto the password rather and really be wary of any firms that are offering amazing a P. Y. On on crypto because it has proven so far too good to be true. More firms are also saying they're exposed to bankrupt hedge fund. Three arrows is three arrows, the first domino to fall here charlotte. How serious are the issues with that firm going bankrupt? This is game changing is a, I would say a historical event in this this maturing uh industry of Cryptocurrency. It could be worse if we if we get if we didn't have sam bedford breed. But the thing to remember here is that they took a very bullish position. I mean one of the most bullish and had some of the biggest the most funds invested in Cryptocurrency and were highly highly leveraged. So this is the extreme worst case scenario that could have happened to them. I do think that we're we've seen the worst of the fallout, we've seen what's happened with Block Fi Voyager Celsius genesis. But what we don't know yet is some of the smaller projects that are going to be impacted. And what I mean by that is that we found out That they were actually invested three arrows capital was managing the treasury for Treasuries for some of the projects they were invested in. Which means that we just don't know how they were managing that money and it'll take longer. But the big coins and the big market cap coins rather it seems to have stabilized the impact on that. And so I think we're through the worst of it in terms of how it's going to impact the average crypto consumer in the United States. But as you know, a lot of people are still kind of anxious when it comes to the crypto market. Why do you think that seems to be spreading? I you know, I see anxiety, but I also see a lot of optimism, frankly, when I look at the share of consumers that are interested in purchasing Cryptocurrency, who may not have it yet? There's still a lot of interest. And when I look at the Cryptocurrency owners predictions for the price of Bitcoin, that's still relatively optimistic. The anxiety I think comes from these big institutional players who are who are really playing around with and making some big bets. So it's not that folks don't trust Cryptocurrency specifically. It's they don't trust this new industry that's being built up around it. And that's fair, this is a maturing market consumers are right to be very wary of these new players and their risk protocols and the risk they're willing to take on. But I don't think we should associate that with necessarily negative anxiety rather around Cryptocurrency in general because consumers are still committed to crypto, they are still in it for the long run. They may move things over to a hard wallet and sort of go into hibernation during this crypto winter, but they're not giving up, let's talk regulation charlotte last week. The eU reeling its framework and US lawmakers have a few proposals floating around themselves. Do you think the EU regulation will be enough to stop some of the issues that we're currently seeing in this sector? I don't think it's going to to stop anything in the short term, and that just comes from what we know about regulation in general, is that it takes a long time to to pass and to and for things to actually start to play out. But what I will say is that we're going to continue to see a push for regulation, at least in the United States. We've already seen amongst consumers this year. A desire an increased desire for more regulation of Cryptocurrency to and that specifically to be regulated as if it is any other traditional financial asset or security. That's because consumers, again, are not giving up on crypto, but they say, you know what, I don't like idea of my crypto not being accessible to me and they want more, more due diligence, more protection of their assets, charlotte Principato, financial services analyst at morning consult really a great breakdown charlotte. We hope you come back soon. Thank you so much