The crypto market remains under pressure, and the consequences are spreading. Goldman Sachs downgraded Coinbase, one of the world's biggest crypto exchanges, and crypto-focused hedge fund Three Arrows Capital has defaulted on a multi-million dollar loan. Where does the sector go from here after enjoying immense popularity over the past year and a half? David Siemer, Co-Founder and CEO of Wave Financial, joins Closing Bell to discuss crypto market pressures, why firms like Coinbase are under pressure, when market conditions could improve, and more. 

Closing Bell

What's Next for Crypto as Major Exchange is Downgraded, Hedge Fund Defaults?

well as crypto markets remain under pressure causing trouble for both financial firms and countries alike. What's next, when can crypto investors expect relief, especially as prices remain low and trading activity dries up. So joining me now is David Seymour, co founder, and Ceo of Wave Financial and Investment advisory firm focused on digital assets. David, it's good to see you. So we mentioned coin based in particular amid Goldman Sachs's recent downgrade, It is a major crypto exchange. What could this signal for the industry? Yeah, the the mean coin base is a little bit unique in the industry. So they, you know, the challenge of running into now is they expanded really aggressively on staff. They had, you know, they tripled their workforce in a couple of years, which was you know, preparing for a bull market that right now it doesn't look like very likely in the short term. Um So they had a pretty large layoff, there's probably likely probably more layoffs in the future. Um So you know, they're in a kind of challenging situation and you know, a little bit of their own making. But I also really a huge fan of coin based in general, especially at these prices. You know, it is a great company, it's very well run, they are almost synonymous with crypto exchanges at least at least in most of the U. S. And european world. Um So I think this is gonna be fine. Obviously what Goldman looks at in these downgrades is usually pretty short term and short term. All the things you cited, the crypto markets are challenged. So for me this is gonna be challenging the short term, so how short is short term David, I mean, some in the crypto space experts have come on this show and told me that we could see further carnage in crypto, how low could we fall. Yeah, there's a little more carnage to come as our guests also. Um, you mentioned three arrows and like, you know, Celsius and blocked by and all the challenges and the bailouts that are in process right now and there's, there's a lot to be worked out. You know, it always happens in these bull markets is, there's just a lot of leverage. Um, everyone borrowing from everybody, the three arrow, you know, what looks like it likely to become an insolvency is it was, was a very large player, but also was connected very closely with a few other like large centralized players that are now all challenged as well. There's a lot of contagion out there. I mean, three arrows work with everybody. They probably had, you know, 50 something different counter parties, they were effectively borrowing assets from that need to be repaid and are not repaid and even worse will probably be stuck in some kind of Receivership for a period of years. Um, so they, you know, a lot of companies that were fairly well run, but maybe you should have a little better risk controls are heavily impaired for a long time. And that means that in order to solve things in the short term, they're gonna be more selling, you know, we, we do think there's probably little more selling pressure than that kind of opportunity to buy right now. Um, we watch the market very closely. I mean, Wait Wave is a kind of are a sec registered wealth manager, so for our clients is the kind of ice we give. Okay, Another question that I have is how closely are you watching? What happens in El Salvador? Any fears that that could cause some sort of contagion in the crypto space? The fact that el Salvador has accepted Bitcoin is legal tender. And we've seen clearly the market slump quite dramatically. Yeah, it's it's it's obviously very unfortunate. Um I mean, El Salvador has had $401 million in Bitcoin and now it's a $200 million in Bitcoin. So in the, from a crypto standpoint that those assets hitting the market is not that big a deal, like we saw massive liquidations to get where we are, this $28,000 price already. So, so make, I don't see it adding a lot of pressure to the crypto sphere other than just the, the, I guess signal and news newsworthiness of a country giving up on Bitcoin would be really lousy. So that that would probably be the larger event as far as El Salvador itself, You know, there are about a 25 billion GDP country, you know, losing a couple $100 million is definitely a challenge for a small country. And especially as risky a bet as it could look out to be, you know, for the president to go down this direction again, could there's a lot of countries that are contemplating making big point legal tender, which this would obviously set back. So it's not, it's not bad. We got to leave it there. Thanks so much for coming on the show. That's David Seymour, co founder and Ceo of Wave Financial.