(Kitco News) - Aside from Bitcoin, Ether, and a few other cryptocurrencies with a high trading volume, investing in crypto is "more risky" than buying penny stocks, according to Ronald AngSiy, COO of CEO.ca, who previously worked as a blockchain expert.
"Any individual can manipulate crypto prices today because of how small the market cap is," he observed. "Once you get to the smaller cryptocurrencies, that's where it's significantly more risky than a penny stock for investors."
He highlighted that Tesla stock has a market cap of $650 billion, while the entire crypto market only has a market cap of $1 trillion, making crypto "easy" to manipulate.
"If you look at the price of a Binance token, versus the price of a Tesla stock, you'll see how small the crypto market is," he suggested. "It's hard, in such a small market, to say how what's happening in the world will directly affect prices today."
AngSiy spoke with David Lin, Anchor and Producer at Kitco News.
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Bearish Crypto Trends in 2023
AngSiy suggested that there is "more pain ahead for crypto investors" in 2023, as the Federal Reserve continues to hike interest rates.
"How that pain is manifested is hard to exactly say, because the crypto market is so small that you could have one or two front-end entities manipulate the price of whole crypto market," he said.
He observed that since Bitcoin came into being in 2008, the crypto market has only experienced a "low interest-rate world," with the Effective Fed Funds Rate (EFFR) never rising beyond 2.5 percent until 2022. Currently, the EFFR is around 4.5 percent, and Fed Chairman Jerome Powell has stated that further hikes are expected until the Fed reaches a terminal rate of around 5 percent in 2023.
"We've never seen it [crypto] in a high and growing interest-rate world, which is what is happening right now," he said. "When you look at low interest-rate environments, it's easier for investors to borrow money, and then to take that money and then allocate a portion of it to crypto… now you're seeing money being pulled back from risk assets [like crypto] and either allocated to safer assets, or you're seeing risk assets being margin called."
To find out AngSiy's outlook for Bitcoin and Ether, watch the video above.
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