Michael Sonnenshein noted that equity markets are showing volatility, while digital assets remain relatively stable.

​Grayscale CEO points to signs of separating cryptocurrencies from equities

03.03.2023 - 10:30

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3 min

What’s new? Michael Sonnenshein, CEO of digital asset management firm Grayscale, believes that the impact of the collapse of the FTX exchange, crypto lender Genesis and other major players are no longer having a meaningful impact on the industry. He expressed regret over the bankruptcy of these companies and the damage done to users but noted a “cautiously optimistic” outlook on the impact of these events. In an interview with crypto investor Scott Melker, Sonnenshein said that while equity markets are showing volatility, cryptocurrency prices remain relatively stable, which could indicate a separation of the digital asset industry from traditional equities.

Link to interview

What else did Sonnenshein say? Grayscale’s CEO said that the cause for investors’ concern was not only the bankruptcies and insolvencies of some cryptocurrency companies but also the heavy pressure on miners and other parts of the ecosystem.

It remains to be seen whether cryptocurrencies will return to all-time highs in the near future, but the relative stability in prices could help the crypto sector as a whole to recover, Sonnenshein believes. He stated that the industry is becoming more resilient and is starting to weed out those who are trying to make a quick buck or not investing in cryptocurrencies in the long term.

The businessman positively assessed a new option for cryptocurrencies — “inscriptions,” which can be made using the Ordinal protocol on Bitcoin and Litecoin networks. Sonnenshein noted the popularity of the new technology and called it “interesting.”

Earlier, analysts at brokerage Bernstein also pointed to the declining correlation of cryptocurrencies with the stock market. Financial conglomerate Citigroup said that the crypto market is stronger than the stock market, noting that it has remained resilient amid increased regulatory scrutiny.

“Inscriptions” are digital assets written on a satoshi/litoshi, the smallest fraction of a BTC/LTC (0.00000001 part of a coin), and are similar to non-fungible tokens (NFTs).

What is known about Grayscale? It is a digital asset management fund founded in 2013. The company allows US-accredited investors to buy cryptocurrency investment products in a regulated environment through traditional market instruments. It is part of the Digital Currency Group (DCG) conglomerate owned by Barry Silbert.

According to media reports, DCG began selling crypto fund units at a deep discount in early February and withdrawing shares of Grayscale-managed investment funds. This is how DCG is trying to raise funds to support Genesis. Later, the media reported that DCG’s 2022 losses exceeded $1,1 billion.

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