Coinbase co-founder Fred Ehrsam told CNBC on Wednesday the cryptocurrency market has not yet reached its apex, even if trading in various digital coins remains choppy going forward.
Ehrsam’s comments on “Closing Bell” came shortly after Coinbase went public through a blockbuster direct listing on the Nasdaq, a major milestone for crypto in its journey toward institutional acceptance.
While skeptics remain, Ehrsam said they have continually been proven wrong since he became involved in bitcoin two years after its creation in 2009.
“As somebody who’s been working in crypto for 10 years, I’ve heard that statement hundreds, if not thousands, of times,” Ehrsam said, when asked by CNBC’s Sara Eisen whether the current hype around the crypto market could signal “this is the top.”
Ehrsam co-founded Coinbase in 2012, when bitcoin was around $6, and still serves on the company’s board of directors. Co-founder Brian Armstrong serves as CEO of Coinbase, the largest cryptocurrency exchange in the U.S.
“I think it will be volatile from here, but that’s just the nature of such a huge technology coming into existence, and I don’t think it could happen any other way,” said Ehrsam, managing partner at crypto-focused investment firm Paradigm.
Bitcoin has been on a tear since last year. As recently as October, bitcoin traded below $11,000 apiece. It hit a record high over $64,000 earlier Wednesday, although it retreated from those levels and was trading around $62,000 around 4:45 p.m.
A number of large institutions, including major Wall Street banks, have announced their entrance into crypto in recent months. That’s been cited as one factor fueling the rise of bitcoin.
The sustainability of the crypto rally has come into question.
For example, the latest Bank of America Fund Manager Survey found about 74% of respondents think bitcoin is in a bubble. And on Wednesday, Federal Reserve Chairman Jerome Powell said he believes cryptocurrencies are “really vehicles for speculation,” adding: “They’re not really being actively used as payments.”
There’s also been the meteoric ascent of nonfungible tokens, or NFTs, in recent months. Ownership of these digital assets is recorded on a blockchain, the decentralized ledgers that underpin cryptocurrencies such as bitcoin. Some have also cast doubt on NFTs, suggesting they’re also in a bubble and will eventually lose their value.
“This is the fourth crypto cycle. It started in 2011, when I was trading out of my apartment in New York working at Goldman,” said Ehrsam, a former foreign exchange trader at the bank. “[Bitcoin] went from $32 to $2 … over the course of three hours.”
Other major cycles occurred in 2013 and 2017, he said, “and now it’s happening again.”
“I think the reality is that if crypto is to achieve the huge mission that I think it can — which is being a new global digital money, financial system and internet app platform — there is bound to be a lot of volatility along the way,” Ehrsam said. “It’s certainly not for the faint of heart in the early days, and that was a huge challenge in building Coinbase and staying the course.”
Coinbase closed its maiden trading session on the Nasdaq at $328.28 per share, putting the crypto exchange’s market capitalization at $85.8 billion on a fully diluted basis.
