“Is Crypto Back?” with Mike Switzer and Allen Gillespie

Mike: Hello and welcome to another edition of the South Carolina Business Review.  This is Mike Switzer. The crypto currency market has been on a steady rebound this year.  Okay, well, maybe steady is not the right word because it certainly has had its traditional volatility.  So, where does it go from here?  Allen Gillespie is Chief Investment Officer and our resident crypto expert.  He’s at Fintrust Capital Advisors where he joins us from by phone now in Greenville, SC.  Allen welcome back to the program.

Allen: Glad to be here Mike.

Mike: So, tell us what’s actually been happening with the cryptocurrency market before we talk about where you think it’s going?  Because we have certainly seen the trend line moving back up even with that volatility that it always has.

Allen: Yes, you and I have certainly discussed volatility in the space since I was first on your show many, many years ago.  Obviously after the 2020 election, crypto had a pretty big run.  Bitcoin as the leader, topped out up around $69,000 per coin and fell to a low of about $16,000 on the failure of FTX, one of the crypto exchanges along with some other stable coins along the way.  You know this year along with other technologies and tech stocks have seen a pretty decent rebound back up into the $28,000 to $29,000 range for bitcoin.  So, it didn’t quite ride but it is a volatile space.  It’s a new technology space and obviously that brings questions marks and uncertainties and changes along the way so it’s doing what it does.

Mike: So, would you say that where we are now is just a normal rebound from that big drop or do you see that long term trend line continuing to move higher?

Allen: Volatility in the space goes on.  But when you look below the hood you continue to see adoption by what I call more and more established players.  I mean most recently Fidelity has now rolled out a retail crypto offering.  They will be rolling that out to advisory firms later this year as well so when a name like Fidelity begins to enter the space, they are very thoughtful.  They are a large firm.  They are a regulated firm.  They are methodical about decisions, about entering a space.  So, I think when you look at things like that, there certainly are established industry players that think it’s going to be around for a while.  Obviously, others are taking a go-slow approach because regulations are certainly constantly discussed about what that is going to look like.  So, certain players need higher degrees of regulatory clarity than others.  When I look under the hood, I continue to see adoption from a wide variety of financial services firms.

Mike: And we’ve been reading about, and this topic has come up of course many times, about the vast amounts of electricity that it takes to mine bitcoins and most of these cryptocurrencies and that there is a movement going on now to reinvent that whole process for the blockchain.  A coin like Ethereum I believe is working on this.  Can you talk about that?

Allen: Sure. So obviously energy intensity is a question mark across a lot of industries these days.  Trying to go to a more closed loop design and more efficient design.  Our knowledge of supply chains is much better hooked.  In that regard I don’t think that’s unique to the crypto space.  But one of the things if you think about a blockchain being a full audit trail back the first transaction, right, if you are constantly growing your dataset but then constantly going back to that first transaction, obviously, that consumes a lot of power.  So, essentially you are seeing the industry adjust in the rules to how far back on the chains do we need to go to validate transactions.  Who are the established players who do those?  So, imagine if you will the easiest, I think analogy for people to maybe understand this is if you were looking at property records in the state of South Carolina.  Clearly, the property has been here for a long time.  Some of them parceled out system formation of the state, the country.  You know some would argue there were different pre-colonial owners. You know, but in the last 10 years the records are relatively easy.  So, if you are trying to go back and get the full record of the history of a plot of land in the state of South Carolina is a much different question than the last 10 years of land.  So, if you think about that energy cost, right, you know if you are to pay say an attorney to do 10 years of record searches.  That’s a much different transaction than if he’s got to research 250+ years of transaction records around a parcel.  So, the same problem applies but that’s what the industry is trying to solve going forward.

Mike: Well Allen as always, very interesting topic.  Thank you so much for spending time with us today.

Allen: Glad to be here.

Mike: Allen Gillespie is Chief Investment Officer at Fintrust Capital Advisors in Greenville, SC.  Remember you can hear the show again at our webpage southcarolinapublicradio.org.  And in fact, you can find this wherever you find podcasts.  With the South Carolina Business Review, this is Mike Switzer.

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