Jim, Welcome Back to New York City

As persistent inflation strikes fear in the market ahead of Wednesday’s FOMC meeting, the total crypto market cap has plunged below $1 trillion dollars for the first time since January 2021, as data from The Block shows:

In this special episode of The Scoop, financial veteran Jim Greco — a general partner at crypto high-frequency trading firm F9 Research — examines some of the causes of the recent market meltdown, and explains why only the strongest crypto companies will survive.

According to Greco, this sell off was driven primarily by macro concerns regarding persistent inflation:

“On the actual market structure component of what the sell off has been about, I think it's largely a macroeconomic story — and really ever since the end of last year, we've been dealing with a huge inflation story.”

Last Friday, the US Labor Department reported May’s consumer price index to be up 8.6% compared to May of 2021, signaling the highest levels of inflation since the 1980s. 

In addition to cratering crypto prices, Greco also believes the bear market will help bring last year’s inflated crypto valuations back to reality:

“Were these companies ever worth $10 billion or whatever the valuation was? Probably not. I think this was just investors looking at the direction of volumes and volatility last year, projecting out as if that wouldn’t stop into 2025, but now we've had a huge correction and it's pretty clear what those projections into 2025 look like now, and they're not anywhere close.”

Indeed, crypto financial services firm BlockFi, which reportedly raised funds at over a $5 billion valuation just last year, announced recently that it was in the process of finalizing a down round that would bring BlockFi’s valuation to just $1 billion. 

Episode 52 of Season 4 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Jim Greco general partner at F9 Research.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher or wherever you listen to podcasts. Email feedback and revision requests to podcast@theblockcrypto.com.

This episode is brought to you by our sponsors Fireblocks, Coinbase Prime & Cross River

Fireblocks is an enterprise-grade platform delivering a secure infrastructure for moving, storing, and issuing digital assets. Fireblocks enables exchanges, lending desks, custodians, banks, trading desks, and hedge funds to securely scale digital asset operations through the Fireblocks Network and MPC-based Wallet Infrastructure. Fireblocks serves over 725 financial institutions, has secured the transfer of over $1.5 trillion in digital assets, and has a unique insurance policy that covers assets in storage & transit. For more information, please visit www.fireblocks.com.

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About Cross River

Cross River is powering today’s most innovative crypto companies, with banking and payments solutions you can rely on, including fiat on/off ramp solutions. Whether you are a crypto exchange, NFT marketplace, or wallet, Cross River’s API-based, all-in-one platform enables banking as a service, ACH & wire transfers, push-to-card disbursements, real-time payments, and virtual accounts and subledgers. Request your fiat on/off ramp solution now at crossriver.com/crypto.