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Valkyrie Funds, Ark Invest Say Crypto Has Hit ‘Bottom’ Amid Recession Woes

Frank Downing, director of research at Ark Invest and Steven McClurg, co-founder of asset management firm Valkyrie, joined “First Mover” to discuss the state of crypto, the economy and their respective crypto-focused separate managed accounts.

Updated Oct 7, 2022, 6:53 p.m. Published Oct 7, 2022, 6:53 p.m.
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On Friday the Labor Department reported U.S. job growth rose by 263,000 during September, which was better than expected but still lower than August’s 315,000 additional jobs.

So does the decrease in new jobs signal a change in Federal Reserve thinking, and how would that affect cryptocurrencies?

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Asset managers, from Ark Invest and Valkyrie see crypto as having hit bottom, meaning it can go no lower in price, at a time when the Federal Reserve’s “tug-of-war” with the global macro environment could lead to continued interest rate hikes.

“Whether the Federal Reserve oversteps and makes a policy mistake, we’re essentially pricing in a recession,” Frank Downing, director of research at Ark Invest, said on CoinDesk TV’s “First Mover” on Friday.

Read more: US Jobs Growth Slows Less Than Expected; Bitcoin Slips From $20K

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Steven McClurg, co-founder of asset management firm Valkyrie, agreed, adding that “we’re definitely in a recession.”

According to Downing, is showing signs of “constructive developments,” referring to the small increase of “supply held by long-term holders.”

“The cost basis of those long-term holders has actually climbed above the cost basis of short-term holders, which historically has been a strong bottoming signal,” Downing said.

Read more: First Mover Americas: It’s Payrolls Day Again, and Bitcoin Holds Tight Near $20K

Nonetheless, crypto has “gone down more than the rest of the market,” McClurg said.

“The markets are clearly in a downward trajectory at the moment,” McClurg said. But “crypto is probably closer to the bottom than the S&P [500] or Nasdaq.”

In the near term, McClurg said, “prices will continue to go down across all risk assets until there’s a pivot from the Federal Reserve.”

The Federal Reserve's Federal Open Markets Committee is likely to raise interest rates by 75 basis points at its next meeting in November, followed by a 50 bps rise in December and then upwards of 25 basis points two times after that over the next year, predicted McClurg.

Crypto separately managed accounts (SMAs) to hit the market

Despite Downing and McClurg’s bearish outlook in the near term, the fund managers are optimistic about the future of crypto.

The two asset management firms have each launched individual crypto-based separately managed accounts (SMA), which will primarily be managed by financial advisors who will serve as intermediaries for investors.

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“We take that risk on for them and we manage that risk properly,” McClurg said. “Additionally, we have set it up to where they can move in and out of that product very quickly through a redemption or an order process.”

Read more: Valkyrie Funds to Offer Crypto SMAs, Challenging Ark and Franklin Templeton

Downing of Ark Invest, which recently said it would be working with Eaglebook Advisors to manage risk for its investors, is operating under a similar strategy where it takes on crypto risk while also holding onto the keys.

“Advisors will be able to invest their client funds with low minimums, [which] has direct integrations to existing portfolio management tools used by advisors,” Downing said.

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Exchange Review March 2025

CoinDesk Data's monthly Exchange Review captures the key developments within the cryptocurrency exchange market. The report includes analyses that relate to exchange volumes, crypto derivatives trading, market segmentation by fees, fiat trading, and more.

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Trading activity softened in March as market uncertainty grew amid escalating tariff tensions between the U.S. and global trading partners. Centralized exchanges recorded their lowest combined trading volume since October, declining 6.24% to $6.79tn. This marked the third consecutive monthly decline across both market segments, with spot trading volume falling 14.1% to $1.98tn and derivatives trading slipping 2.56% to $4.81tn.

  • Trading Volumes Decline for Third Consecutive Month: Combined spot and derivatives trading volume on centralized exchanges fell by 6.24% to $6.79tn in March 2025, reaching the lowest level since October. Both spot and derivatives markets recorded their third consecutive monthly decline, falling 14.1% and 2.56% to $1.98tn and $4.81tn respectively.
  • Institutional Crypto Trading Volume on CME Falls 23.5%: In March, total derivatives trading volume on the CME exchange fell by 23.5% to $175bn, the lowest monthly volume since October 2024. CME's market share among derivatives exchanges dropped from 4.63% to 3.64%, suggesting declining institutional interest amid current macroeconomic conditions. 
  • Bybit Spot Market Share Slides in March: Spot trading volume on Bybit fell by 52.1% to $81.1bn in March, coinciding with decreased trading activity following the hack of the exchange's cold wallets in February. Bybit's spot market share dropped from 7.35% to 4.10%, its lowest since July 2023.

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