The crypto collapse: What the TerraUSD stablecoin collapse could mean for invested firms
. So what does the plunge mean for companies like microstrategy, which are so highly leveraged to these assets for more lets? Bring in coin shares chief strategy officer melton de moores mountain great to have you with us. You know at some point in time there was talk about more and more companies on the s p, 500, potentially putting bitcoin on the balance sheet, and that seems like that is is done. I mean thats just a pipe dream at this point: um what whats the ripple effect. In your view of this, what kind of ripple effects will we see with bitcoin being where it is now absolutely look, i think, were operating in a really new environment? Um 50 of the s p 500 is down over 50. Since the start of the year, investors are de risking across the board, while the fundamentals of many businesses like coinbase and our business coin, shares are quite sound. Um price to earnings ratios are very healthy. I think investors generally are very wary of risk. Theyre de risking across their portfolio theyre, trying to stem the bleeding and so were seeing a sell off, were seeing concerns around this downturn. I think many investors do use uh crypto public companies as a proxy for exposure to bitcoin ethan the crypto market overall, so we generally do see high correlations between crypto related equities and crypto markets um. That being said, i think many of the concerns around microstrategy and the bitcoin exposure on its balance sheet um are are somewhat overblown um.
They do have some very minimal amount of leverage. I think theres been extensive coverage on the topic, but i do think because weve always highlighted bitcoin and crypto assets have historically been volatile, were seeing higher highs, also higher lows, but these assets, you know, theyre, not cash, theyre, not cash equivalents and in the current environment. I think the market is pricing, a preference for free cash flow and cash on balance sheet: hey, hey, melton, um, its dan, you and i were talking earlier in the week – and you were mentioning, despite some of the weakness that weve seen in some of the major Coins in bitcoin, obviously um and eth in particular, here youre, seeing some data where youre seeing institutional inflows into other products. Here talk to us a little bit about that because i know thats a really important pillar of the bulk case. Here. Absolutely look. I think its always really interesting um. Obviously the narrative right now weve seen crypto market clap cap hard and decline significantly by about a third over the last week or so so clearly, theres theres concern weve, seen events like this before, albeit not at this rapid pace. The volatility and the velocity, i think in all markets is feeling like its increased quite a bit um, but one of the interesting things we track is since were in the business of asset management. We track product flows, we issue weekly fund flows report and, interestingly, last week, even though bitcoin saw 15 price decline, there were net inflows into bitcoin products, around 45 million dollars of net inflows and global aum of bitcoin products.
The end of last week still stood at 30 billion around 50 billion across all crypto products. So again i think investors are sitting by opportunistically. There are investors who are looking to add crypto exposure. You know one to four percent allocation is historically what weve uh weve advised with quarterly rebalancing. So i do think there are buyers who are looking to add now. Will those positions be massive size, possibly not, but i do think there are buyers who are looking at this opportunity as an opportunity to accumulate a dca or dollar cost average in to position, particularly in assets like bitcoin ether and others, malcolm good, to see you. Thank you for your time. Of course, melton de meuris of coin shares. Guy youve talked to michael saylor, the ceo of um of microstrategy many times, and so im wondering what your take is on on this exposure. Now that its to the downtown of the bitcoins on the downside, i dont want to speak for michael ill, say this. Knowing him, i dont think hes going to waver from his view. My sense is in a week or two from now youll find that microstrategy has probably continued to add bitcoin to their balance sheet. You know, i dont think he again im not speaking for him just in mind, you know knowing being familiar. I dont think hes focused on the 10. 15 000 moves hes, obviously in this, for not the next five minutes for the next five years.
With that said quickly about bitcoin, i tweeted it earlier. I dont think its coincidence that bitcoin topped out around the same time. This fed became responsible late in november because i think bitcoin was born out of the fact that central banks are running amok and now that theyre trying to get their act together, bitcoin and cryptos been cut in half the trigger for bitcoin to go higher again. In my opinion, if, for whatever reason, this fed blinks, be it market, uh reasons or otherwise, i think bitcoin goes parabolically higher, well thats dan. Why you bought a lot of crypto today right, not a lot, but you bought crypto today, because the high correlation, the correlation between bitcoin and the nasdaq is at an all time, high yeah, so thats the same thing when i think of some of these smart contracts, Like ethan and solana, i i think of them as like. Maybe a high growth um high valuation, nasdaq sort of stock that theres, like ecosystems being built around them, thats. How? I think about it from an allocation standpoint and i just think theyve come in so far and i havent bought any in a very long time. I just think that again, i think melton just said it dollar cost averaging. None of us are going to know where that bottom is, so you start small and you kind of work your way into it, and you have that thesis and you stick with it.
Yeah, karen you adding to uh your holdings in the top drawer that youve got in bitcoin in the drawer that no no definitely not leave it. There see what happens and tim um like it might be more the middle drawer for me um, i you know, i think youve got a case where this is the kind of pullback that every institution who wanted to own this six, nine and twelve months ago has Been waiting for, i do think institutional adoptions is, is certainly coming more than weve actually seen it leave, and i think you actually have a case where the regulators finally have a lot more to go.