Crypto winter ‘only going to get worse,’ blockchain firm CEO says
There’s something about the latest crypto crash that makes it different from previous downturns.
Artur Widak | Nurphoto | Getty Images
The ongoing crypto winter is “only going to get worse” as the industry recalibrates to a higher interest rate world, according to the chief executive of blockchain firm Tezos.
Asked about the fall in price of many crypto assets this year, Kathleen Breitman said: “A lot of this was inflated on cheap money, and a lot of this was backed by basically, like, VCs trying to pump.”
“There was a lot of easy money going into the system and I think it was artificially stoking a number of different things, mainly valuations of these companies,” she told CNBC’s Karen Tso Wednesday at the Web Summit conference in Lisbon, Portugal.
Breitman cited NFT marketplace OpenSea, where trading volume plunged from $2.9 billion in September 2021 to $349 million in September 2022, according to data from Dune Analytics.
“Clearly there is a phenomenon that has kind of crested and gone away in a lot of these markets, but meanwhile they’re saddled with a $13 billion valuation,” Breitman said.
“So I think there’s a lot of cheap money that went in, valuations went super sky high, you had people scrambling to make those valuations justified in some form, usually through cheap tactics like yield farming, and now that the easy money’s gone away, all that’s left is we’re getting communities, I hope,” she continued.
On whether the pause in Federal Reserve rate hikes that economists expect next year could see crypto markets rally, Breitman said there would still be a shift in crypto and tech valuations being based on anticipatory benefits to actual user growth; and without the ability to keep using “cheap tactics” to get “easy come, easy go” users in the door.
“Crypto hasn’t been evaluated by that metric, and neither has technology in the last 10 years that we’ve had low interest rates,” Breitman told CNBC. “It remains to be seen, but basically I think what you’ll find is the things that are useful are going to thrive.”
“But that’s the small minority of crypto applications, whether people want to admit it or not.”
Tezos, which Breitman also co-founded, is a smart contract platform, like the better-known Ethereum, but that allows token holders to vote on changes to the platform before they are enacted every few months.
Usage of the network has increased on 2021, Breitman said, driven by demand from the art world, where digital artists are minting art on the blockchain and trading it. This use is providing one of the only sources of organic growth in the industry more broadly, she said.
The notion of the end of the era of easy money in crypto is one that analysts have been discussing in recent months amid the downturn.
Some industry figures believe the recent relative price stabilization of assets such as bitcoin, which has been trading between $18,000 and $25,000 for the last four months after experiencing massive volatility, is positive for the industry.
Antoni Trenchev, co-founder of crypto lender Nexo, previously told CNBC bitcoin’s performance was “a strong sign that the digital assets market has matured and is becoming less fragmented.”
A driver for an independent contractor to FedEx delivers packages on Cyber Monday in New York, US, on Monday, Nov. 27, 2023.
Stephanie Keith | Bloomberg | Getty Images
President Donald Trump on Wednesday signed an executive order shutting the de minimis trade loophole, effective May 2.
Trump in February abruptly ended the de minimis trade exemption, which allows shipments worth less than $800 to enter the U.S. duty-free. The order overwhelmed U.S. Customs and Border Protection employees and caused the U.S. Postal Service to temporarily halt packages from China and Hong Kong. Within days of its announcement, Trump reversed course and delayed the cancellation of the provision.
Wednesday’s announcement, which came alongside a set of sweeping new tariffs, gives customs officials, retailers and logistics companies more time to prepare. Goods that qualify under the de minimis exemption will be subject to a duty of either 30% of their value, or $25 per item. That rate will increase to $50 per item on June 1, the White House said.
Use of the de minimis provision has exploded in recent years as shoppers flock to Chinese e-commerce companies Temu and Shein, which offer ultra-low cost apparel, electronics and other items. The U.S. Customs and Border Protection has said it processed more than 1.3 billion de minimis shipments in 2024, up from over 1 billion shipments in 2023.
Critics of the provision say it provides an unfair advantage to Chinese e-commerce companies and creates an influx of packages that are “subject to minimal documentation and inspection,” raising concerns around counterfeit and unsafe goods.
The Trump administration has sought to close the loophole over concerns that it facilitates shipments of fentanyl and other illicit substances on the claims that the packages are less likely to be inspected by customs agents.
Temu and Shein have taken steps to grow their operations in the U.S. as the de minimis loophole has come under greater scrutiny. After onboarding sellers with inventory in U.S. warehouses, Temu recently began steering shoppers to those items on its website, allowing it to speed up deliveries. Shein opened distribution centers in states including Illinois and California in 2022, and a supply chain hub in Seattle last year.
WATCH: President Trump signs executive orders for reciprocal tariffs
Apple CEO Tim Cook, center, watches during the inauguration ceremonies for President Donald Trump, right, and Vice President JD Vance, left, in the rotunda of the U.S. Capitol in Washington, Jan. 20, 2025.
Shawn Thew | Afp | Getty Images
Apple slid more than 6% in late trading Wednesday and led a broader decline in tech stocks after President Donald Trump announced new tariffs of between 10% and 49% on imported goods.
The majority of Apple’s revenue comes from devices manufactured primarily in China and a handful of other Asian countries. Nvidia, which manufactures new chips in Taiwan and assembles its artificial intelligence systems in Mexico and elsewhere, fell about 4%, while electric vehicle company Tesla dropped 4.5%.
Across the rest of the megacap universe, Alphabet, Amazon and Meta all dropped between 2.5% and 5%, and Microsoft was down by almost 2%.
If Apple’s postmarket loss is matched in regular trading Thursday, it would be the steepest decline for the stock since September 2020.
Trump on Wednesday afternoon said the new taxes on imported goods would be a “declaration of economic independence” for the country. He announced a 10% blanket tariff on all imports, and higher duties for specific countries, including 34% for China, 20% for European nations, and 24% for Japanese imports, based on what tariffs they charge on U.S. exports, Trump said.
“We will supercharge our domestic industrial base, we will pry open foreign markets and break down foreign trade barriers,” Trump said during his speech. “Ultimately, more production at home will mean stronger competition and lower prices for consumers.”
Stocks broadly got hit by Trump’s announcements. An exchange-traded fund tracking the S&P 500 slid 2.8%, while an ETF following the Nasdaq 100 lost more than 3%.
During his speech, Trump praised Apple, Meta, and Nvidia for spending money and investing in the United States.
“Apple is going to spend $500 billion, they never spent money like that here,” Trump said. “They’re going to build their plants here.”
The Nasdaq just wrapped up its worst quarter since 2022, dropping 10% in the first three months of the year, though the tech-heavy index rose in each of the first two days of the second quarter.
WATCH: President Trump signs executive orders for reciprocal tariffs
Guests including Mark Zuckerberg, Lauren Sanchez, Jeff Bezos, Sundar Pichai and Elon Musk attend the Inauguration of Donald J. Trump in the U.S. Capitol Rotunda on January 20, 2025 in Washington, DC. Donald Trump takes office for his second term as the 47th president of the United States.
Julia Demaree Nikhinson | Getty Images
Amazon submitted a bid to the White House to purchase the social media app TikTok from its Chinese owners, CNBC has confirmed.
The company sent its proposal in a letter this week to Vice President JD Vance and Commerce Secretary Howard Lutnick, according to a source familiar with the matter who asked not to be named because the discussions are confidential. The parties aren’t treating the bid seriously, however, given that it was submitted just days before a deadline staving off a U.S. ban is set to expire, the person said.
Amazon declined to comment.
The e-commerce company’s offer, which was first reported by The New York Times, comes as TikTok’s fate in the U.S. is up in the air. The short-form video app faces another potential shutdown in the U.S. on April 5 if ByteDance, its parent company, can’t reach a deal to divest TikTok’s American operations. Lawmakers passed a bill last year setting a Jan. 19 deadline for the sale, but Trump signed an executive order granting a 75-day extension for a potential deal.
Trump could announce a decision on TikTok’s fate in the U.S. as soon as Wednesday, sources familiar with the situation told CNBC’s David Faber. Mobile technology company AppLovin has also made a bid for TikTok, Faber reported separately, citing sources familiar with the matter.
TikTok has emerged as a major hub for e-commerce as it has poured money into growing its online marketplace, called TikTok Shop. TikTok’s lucrative marketplace, coupled with the app’s more than 170 million users, could be an attractive asset for Amazon. Following TikTok’s success, Amazon launched and then shuttered a short-form video service of its own.
Last August, the two companies formed a partnership that allowed TikTok users to link their account with Amazon and make purchases from the site without leaving the app. The deal attracted scrutiny from lawmakers who were concerned about its potential national security risks.
WATCH: How TikTok Shop is beating Amazon and Temu in social shopping
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports12 months agoStory injured on diving stop, exits Red Sox game
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business3 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway