Tradfi market participants see opportunity in crypto investment despite “red wedding” burning buildings

AUSTIN, Texas – Asset managers are salivating over opportunities in growth stocks and depressed tokens that took an undeservedly excessive hit during crypto’s bear market, market participants said at Wednesday’s Consensus 2023 event.

Lili’uokalani Trust CEO Dawn Harflinger and others who invest in the crypto sector sounded a note of optimism despite recent market destruction, which Harflinger likened to the famous carnage in the “Red Wedding” episode of the HBO series “Game of Thrones ” .”

Harflinger said she’s actually looking forward to running into the “burning buildings” in this market, and specifically said she’s excited to gain additional exposure to secondaries, and participate directly in the funding rounds of growth-stage blockchain companies.

She shared a panel at Consensus with Matt Halstead, director of real estate and digital assets for Texas Teachers, and Dan Tapiero, CIO at 10T Holdings.

Halstead argued that digital assets are “an investment that has the potential to be integral to the technology of the future,” and emphasized the broader impact of the innovations. Halstead acknowledged both the volatility of digital assets along with their willingness to accept it, indicating that they have very little sense of market timing.

“It’s not clear how the industry is going to develop, but we think the future is bright,” Halstead said. The overarching theme is that the opportunity in digital assets is multifaceted, he said, and that valuations — while declining — are worth gaining exposure to.

This message was echoed by others on the panel.

The digital asset ecosystem is broader and deeper than in the past, Tapiero said, and assets have lower correlations to bitcoin itself. Despite claiming that “I don’t hear anyone saying Bitcoin is going to zero,” he said the existence of uncorrelated digital assets gives institutions the ability to expand beyond bitcoin, such as investing in discounted altcoins and tokens.

Increased use of digital assets by traditional finance pushed valuations to excessive levels, Tapiero said. Asset valuations of 10x to 12x earnings were replaced by valuations of 50x to 100x. The resulting declines led to the crypto winter being felt by a wider number of participants.

As valuations have come back in line, Tapiero argued that the timing is promising for big returns.

“If you know what you like and what kind of portfolio you want to build, it’s the best time for crypto investing,” he said.