Trends Watch: February 28, 2019

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.

This week, Elana talks with Justin Litchfield, CTO, ProChain Capital.

What is your outlook for crypto?

When viewed as a technology, the fundamentals for crypto continue to improve.  The technology is certainly maturing and all non-price fundamentals continue to strengthen.  When viewed as an actively traded asset, that’s a bit tougher because there are not really any comparables for such an early stage technology being publicly and actively traded.  In this market cycle of crypto prices, we have likely not seen the bottom for bitcoin this year, and I expect a growing number of other crypto projects (ETH, ADA, XRP, and nearly all “tokens”) to continue to weaken and approach zero.  I do expect a long-term bottom in bitcoin prices this year and a steady climb to commence that should lead us to the next peak at $100,000+.

What is your outlook for the economy?

The U.S. economy is concerning -- but it’s a disconcerting “concerning” because on most indicators we are outperforming most other countries.  I think that as a country we are cannibalizing a lot of goodwill and momentum that we’ve built up over the last many decades and, without strong investment in infrastructure and basic research, we risk losing the privileged position that we have enjoyed.  Unless we can start strengthening our economy from the bottom up, a 2008 or worse crisis seems inevitable.

What keeps you up at night?

The risk of the U.S. dollar losing our reserve status, which will be very disruptive to the economy.  It lets us “cheat” in very real ways.  If something non-national with a fixed monetary policy like bitcoin becomes the de facto reserve currency, then that would be our best alternative, since at least that puts us on a level playing field.  Another national currency gaining that status would open us up to being at the losing end of what we have done.  So the race is really on for the crypto space to mature enough to take over "reserve status” from the U.S. dollar.