One thing that remains consistent in the world of cryptocurrency is its volatility. Since Bitcoin’s inception in 2009, there have been periods of extreme gains followed by major losses. Crypto bubbles often precede significant declines.
According to Arjun Sethi, co-CEO of Kraken, a leading global crypto exchange recently valued at $15 billion, we are currently existing in a bubble. During a panel at the Fortune Brainstorm Tech conference in Park City, Utah, Sethi confirmed this notion when asked by Fortune‘s Jeff John Roberts.
“Are we in a bubble or not? If I analyze the overall trajectory over the past 15 years, my answer would be no,” the Kraken executive stated. “However, if evaluated quarterly, the answer is yes; bubbles are a recurring phenomenon in this space.”
Sethi’s acknowledgment of a possible downturn reflects the heightened excitement in cryptocurrency markets in recent months. Since January, Bitcoin has consistently achieved new all-time highs, and the total market cap for all cryptocurrencies exceeded $4 trillion for the first time. This surge was further fueled by notable IPOs from firms like stablecoin issuer Circle and crypto exchange Bullish.
While some enthusiasm can be attributed to Bitcoin’s correlation with the stock market—where the S&P 500 has also been setting new records since Donald Trump’s inauguration—recent pro-crypto regulatory changes in the U.S. likely contributed to this crypto surge. However, all bubbles eventually burst, and there are already early indicators of a potential downturn, including waning interest in emerging trends like digital asset treasuries.
Supporters of these companies argue that they provide investors with exposure to cryptocurrencies that are not easily accessible through brokerage accounts, while critics label them as short-term cash grabs that are likely to fail. Recent trends show an average stock price decline of 15% among 15 tracked digital asset treasuries by Architect Partners, a crypto M&A advisory firm.
Despite some negative sentiment, billionaire Barry Silbert, founder of the Digital Currency Group, maintained a more optimistic view during the same panel as Sethi. He stated, “There’s a lot of overvalued assets in crypto right now, and I believe 99% may eventually go to zero. However, the overall crypto asset class is not currently in a bubble.” Given Bitcoin’s history of significant downturns followed by rapid recoveries, Silbert’s perspective might indeed be valid.
