December 4, 2022

Terra blockchain halted again, FTX CEO takes 7.6% stake in Robinhood

Yahoo Finance Live anchors discuss how terra, bitcoin, ethereum, and solana are trading amid a sell-off in the crypto market, plus FTX CEO’s stake in Robinhood.

Video Transcript

BRAD SMITH: Also, I mean, what does this mean for crypto, too, but crypto having its own issues. Crypto woes continue for the market. Thursday, Bitcoin fell below $26,000, its lowest level in 16 months. Ethereum, or Ether, and Solana also saw sizable drops over the past few days. Stablecoins, too, we got to talk more about this, because still struggling to recover here. The Terraform blockchain has now shut down, twice been halted in less than 24 hours, as value for both Terra USD and, of course, the parent or sister coin, Luna, plummeted to zero. The crypto market as a whole has lost $200 billion in just one day this week, as the selloff continues to drag on.

To the extent that we have learned more about algorithmic stablecoins this week perhaps than we ever knew before, as we are now getting more details about how they’re even going to try and restore some type of order to that Terra blockchain and the road ahead is long, because even to put that together, you would still need to ensure that enough people are buying back into a pairing coin, a paired coin, a Luna, so that the UST, the Terra stablecoin, could eventually get back to its dollar peg. But that’s not going to be the case, and it’s also sending a ripple through the broader crypto industry, as we’re seeing right now.

JULIE HYMAN: Yes, I mean, I think part of the action– I’ve seen some speculation that part of the other action elsewhere in crypto this week was because people were somehow leveraged to Terra or other stablecoins or other coins generally that they were cautious about, right? And so then they had to exit other positions. One of the other interesting takes I’ve seen this morning for those who are still crypto faithful is that this further solidifies and strengthens Bitcoin’s position.

In contrast, I’ve seen some tweets this morning about so-called Bitcoin maximalism and people saying, oh, I’m getting out of all of the other coins now. Bitcoin is the one I’m devoting myself to because we’ve seen cracks in other parts. I don’t know that I buy that that’s really happening or if it’s just people talking about it, but there’s a lot of interesting narratives that usually emerge after these big crypto moves.

BRIAN SOZZI: Well, here’s another one. What about FTX and Sam Bankman-Fried here taking that 7.6% stake over in Robin? You have to wonder if– there he is, Bankman-Fried, friend of the show, of course, but taking that stake and maybe signaling a bottom here in the cryptocurrency market because, of course, obviously, Robinhood is a major player in crypto trading of various kinds here. But it does come at an interesting time. We were talking about earlier in the week when Coinbase reported. They got asked the question if they should go out and buy Robinhood. I am wondering if this is a defensive move by Sam to prevent an acquisition like that because if that were to happen, that would put FTX on the ropes, I think.

BRAD SMITH: And for Coinbase at the end of the day, too, the exposure that we’ve seen both Coinbase and Robinhood tried to deploy, at least, is getting more exposure into the institutional side of this, because that’s where they know that the big money is going to make strategic investments to add Bitcoin and direct exposure into funds. And to the extent that they can get that into their clients’ portfolios, that’s going to be where Coinbase and Robinhood’s play is in the future. But for FTX as well, I think it’s extremely strategic, to your point, in ensuring that, hey, you’ve got some skin in the game on what is already a very retail approach platform that Robinhood is right now.

JULIE HYMAN: Yeah, although I was surprised by the Coinbase results, for example, that so much of their user base is institutional at this point. And I think one of the other narratives I’ve been hearing over the past week is the difference in this crypto pullback is that the– than it was three years ago or whatever it was, four years ago the last time we saw this, is that institutions are much more heavily invested. So that’s going to affect the dynamics differently.

BRIAN SOZZI: Yeah, I always think about it this way. Coinbase is for pros, and Robinhood is for posers.