Adam Dell, CEO and founder of Domain Money, joins Cheddar News' Closing Bell, where he discusses how investors should be approaching the crypto market in the aftermath of this week's crash and breaks down what separates a stablecoin like TerraUSD from Tether and USD Coin.

Closing Bell

Lessons Learned from Crypto Crash

Okay, so we've experienced plenty of crypto volatility over the past several months, but haven't seen a week quite like this one in a long time. So what should we make of this? And what does it mean for the future of crypto? Well, joining me now to help me tackle these concerns is Adam Dell, the Ceo and founder of Domain money, a wealth building platform for retail investors. Thanks so much for coming on the show. Adam. So many questions that retail traders have out there, especially about the crypto crash. What should retail traders? No, well, What investors should be thinking about is the long term. It's important to recognize that cryptocurrencies and the underlying Blockchain technologies that make them are very early stage technologies and very much like the Internet in 1999, when there were thousands of startups all fledgling trying to become the next big thing, a very small number of them became behemoths out of that large group of companies amazon google paypal emerged. The same thing is going to happen with this way of innovation. And so investors should be thinking about these assets very much like early stage technology opportunities, highly risky but high return opportunities for those that survive and thrive years. And um, I do think that your note here to look at the long term certainly is solid advice that we hear from people when we look at the market in general, whether it's Cryptocurrency or the stock market right now? Think about the long term, if you can um after we've seen some dramatic selling? Certainly over the past week do you think this is a buying opportunity for Bitcoin adam I mean do you think if you have a long term basis that these are attractive levels to get into cryptocurrencies well? Bitcoin is is in large part a proxy for the sentiment of the crypto currency industry at large. And so there's still an enormous number of participants yet to enter the ecosystem to participate in this asset class. It's our view that the number of investors who participate in this outside class will grow over time. But again volatility is inherent in nascent technologies and Bitcoin is not immune to that. Certainly not immune to that. What about other cryptocurrencies out there right now? I want to talk about the free fall in terror of course a stable coin that's been anything but stable of late. What's the difference between an algorithmic stable coin like Tara Usd and a collateralized one? Yeah I mean the stable coins that are pegged to fiat are are tied to an actual currency in the market that's you know typically issued by a country algorithmic current algorithmic stable coins are mathematical relationships tied to uh you know not non non uh country issued currencies. And so the the vulnerabilities that have been found in the terror ecosystem have been exploited and you see the result of that uh stable coins though have a very important role to play in the digital currency ecosystem and there are a number of options out there that serve the ecosystem well and remain stable despite this current volatility. Okay, so for anyone looking at the Cryptocurrency market right now, Fidelity said to add Bitcoin as an option to add to your 401k. What do investors need to know about that when they're looking at their retirement accounts knowing that this is still a volatile security more so than the stock market, which has seen its own about a volatility of late. Well, the the move by fidelity to introduce cryptocurrencies into investors, 401K. Is a sign that this is a asset class that's going mainstream. But the corollary to that is that there will be a higher correlation between the movements of the broader equities market and the crypto market. And so investors need to think through that as they decide what percentage of their portfolios should be allocated to the Cryptocurrency asset class. It's our view that domain money where we provide managed portfolios for investors, giving them a set of investment expertise where they don't have to choose the individual coins to invest in, will provide a portfolio for them, manage it for them on an active basis. Um investors need to decide what percentage of their overall portfolio they want to allocate to this asset class, recognizing that there are higher return potential but there is also risk. Right? So what is the best asset allocation right now adam? Well, experts suggest and we agreed to to 5% of your investable assets is a reasonable allocation of your overall portfolio to put into crypto. And would you be more invested in stocks versus bonds? Right now, of course, savings accounts seen higher interest rates as well. But for someone who's looking at the holistic picture, what would you suggest? Well, I mean, I encourage people to do their own research, but you know, given the volatility and interest rates and the rising uh landscape there, of those rates given the Fed's moves, uh you know, you can see bond prices reacting quite quite dramatically. And so people who have leveled up heavily in in in bonds see their portfolios declining. You know, it's our view that the long term investor who is thoughtful about dollar cost averaging over time can mitigate against these this volatility by consistently investing a reasonable percentage of their uh savings in in in the market and in in cryptocurrencies depending on your risk profile and your return goals. You can increase your exposure to crypto and and and have the opportunity to have outsized returns, but again, there is no return without risk. Alright. Sound advice from Adam, Dell Ceo and founder of Domain Money Adam. Thank you