Here’s what a billionaire thinks about crypto right now

At the beginning of September, Coinbase Global‘s (COIN -9.30%) CEO Brian Armstrong appeared on CNBC to discuss the company’s management of the crypto winter, his thoughts on specific cryptocurrencies, and where he thinks the market is headed in the coming months.

Armstrong has been at the helm of Coinbase since he founded the company in 2012. Since then, the cryptocurrency market has gone through a series of boom-and-bust cycles. When Armstrong started his business, Bitcoin (BTC -0.88%) shopped for less than $15. Today, it hovers around $20,000, and Armstrong’s net worth is believed to be around $2 billion.

A challenging time, but there is reason for hope

Just because Armstrong is the CEO of one of the most popular cryptocurrency exchanges doesn’t mean he knows exactly what will happen next in the crypto market. But he’s been around since the dawn of cryptocurrencies and has managed to keep his company afloat regardless of financial conditions. So when he shares his thoughts on the market today, people inevitably listen.

In the CNBC interview, Armstrong was asked about the current crypto environment and what it might look like when it returns to healthier levels. Most notable were his comments about a shift from primarily retail investing in crypto to larger institutions now joining in.

Armstrong believes that one particular sector will drive the next wave of crypto adoption: big tech. He cited the agreement between Coinbase and the world’s largest asset manager, Black stone (BLK -2.69%). In the deal, the latter’s investment software will integrate directly with Coinbase so that BlackRock clients can buy Bitcoin seamlessly. Armstrong believes that more and more companies will follow this business model in the future. Since these large companies usually have more cash on hand than private investors, he is optimistic that this influx of capital entering the crypto market could send it to heights we have yet to see.

But until then, Armstrong’s company faces an uphill battle as investors shy away from risky assets like cryptocurrencies due to poor macroeconomic conditions. Coinbase primarily generates profit from the transaction fees it charges for trades. With less trading volume, Coinbase’s profits take a serious hit.

He was asked when he sees the current crypto winter ending. He said this one is slightly different from other crypto winters in the past as it “happens to coincide with the broader macro environment coming down.” He mainly referred to rising inflation and rising interest rates.

Armstrong hopes that the macro environment improves over the next 12 to 18 months, giving crypto a “nice recovery.”

The main takeaway

Investors shouldn’t hang on every word that comes out of the mouths of billionaires, but they should consider these statements when making decisions because they can contain valuable insights. Armstrong has more experience in the crypto industry than just about anyone else, and his knowledge can be useful in gaining more perspective on the sector’s current position.

Armstrong believes that there are cycles when it comes to crypto, similar to the stock market. The incredible growth that the sector experienced from 2020 to 2021 was not sustainable and it was inevitable that some form of correction would follow.

Assume that Armstrong is correct and that the market underperforms over the next year and a half. If so, that means now may be the time for investors to take advantage of incredibly discounted prices in preparation for a return to a healthier market.