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Crypto: Musk’s influence ‘makes regulators and investors nervous,’ expert says

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Emily Parker, CoinDesk Executive Director of Global Content, joins Yahoo Finance Live to examine Fidelity's choice to allow bitcoin to be included in 401(k) savings, dogecoin's price action related to Elon Musk's tweets, and bitcoin price points.

Video transcript

BRAD SMITH: We keep the conversation going in the crypto space. Fidelity is launching a first of its kind Bitcoin investment option for 401(k) plans. The financial services provider cited growing interest from plan sponsors to provide their employees access to digital assets in defined contribution plans. Joining us with more is Emily Parker, CoinDesk's executive editor-- or executive director, excuse me, of global content. What kind of inflection point, Emily, do you perceive that this may be for crypto exposure?

EMILY PARKER: Symbolically, it seems like it's quite important, although when the news came out, it didn't really affect Bitcoin's price in any meaningful way. But yes, symbolically, it is important, this idea of Bitcoin being included in a 401(k) plan for retirement savers. I mean, this is kind of a really radical concept when you think about it. Bitcoin is this relatively new asset. It's very volatile. And retirement is a nest egg, right?

Of course, there are some caveats. We don't know exactly how this will play out. A lot of it will depend on how many employers actually decide to allow this option to happen. They have the option, but they have to decide to actually use it and also what the limit will be. I believe that Fidelity has set the limit at about 20%. You can only put 20% of your assets into Bitcoin, but employers apparently can set that even lower. So I think we still have to see, A, how this plays out with Fidelity's plan, and, B, how many other similar companies follow suit. Fidelity is kind of a leader in the cryptocurrency space, at least among companies of that kind.

BRAD SMITH: Robinhood had also wanted to get into retirement accounts as well. So with all of this in mind and this movement, you know, how does this position that competitive landscape, as you were mentioning a moment ago?

EMILY PARKER: Yeah, I mean, again, it just really comes down to, at the end of the day, it's like, what are employers going to decide, and what are individuals are going to decide? I mean, look, Bitcoin is a notoriously volatile asset, and are people really going to be comfortable putting their retirement savings into Bitcoin? I mean, I think that's really the question here.

BRAD SMITH: Additionally, here, as we're taking a look at the chart of Bitcoin, of course, over the past two years, looking quite healthy. But most recently, we've seen it, once again, be volatile, dipping back below 40,000. What most closely would you annex this to? Is it tied to what we've seen in the broader tech sell-off and the volatility there, or is there something else at play?

EMILY PARKER: You know, it's always anyone's guess, but I think the narrative right now is that Bitcoin is just moving along with the stock market. That just seems to be what's happening. Again, despite this idea of Bitcoin being a totally unique asset, we're really seeing it moving alongside with stocks. So I don't think there's that much more going on. There hasn't been any real significant Bitcoin related news that would explain this, other than just what's going on in the larger market.

BRAD SMITH: Well, in terms of news that may be moving a different coin, Dogecoin. You certainly have a lot of attention on Elon Musk's agreement to acquire Twitter. And of course, because the Doge father has been a advocate for cryptocurrency at whole, and holder or HODL, if you will, what does this signal for where Doge fans or meme coin fans may find some success with seeing movement for a speculative asset to actually be realized as a transactional asset in the future perhaps on Twitter?

EMILY PARKER: It's interesting. I mean, when we're looking at Doge specifically, Doge definitely surged right after this news came out. But it hasn't-- that surge hasn't really been sustained. So in terms of this news on Dogecoin's price, it's a little bit less exciting than I think some people would have thought. But yeah, I mean, Elon Musk is a famous Dogecoin fan.

Look, will his-- I guess, he could find some way to incorporate Dogecoin into Twitter's workings, but I think, for the most part, Elon Musk has shown the tendency to potentially move crypto prices just by tweeting about different cryptocurrencies, right, whether it's Bitcoin or Doge. There was a while last year where it felt like everybody in the cryptocurrency industry was just talking about Elon Musk all the time. And that raises a lot of questions, right? Because cryptocurrency, it's supposed to be a decentralized industry.

And Elon Musk is an incredibly rich, incredibly powerful man, who appears to have the ability to move crypto prices with the power of his tweets. And so I think that just raises some questions. And I think it makes regulators nervous. I think it makes individuals nervous. I mean, even if he's not doing anything technically illegal, it does raise some questions about outsized influence of him personally in the crypto market.

BRAD SMITH: You know, that's what I was about to ask. What are some of the preconceived notions that you believe lawmakers may draw even prior to really making all of the connections or really understanding what Elon Musk's intentions are, not just with Twitter, but also with cryptocurrency?

EMILY PARKER: It's kind of a gray area. This came up a lot last year. Not only with Elon Musk, but for example, with Reddit and GameStop, and this question of, if you have people tweeting and using social media to boost the price of an asset, I mean, is that just something that makes people uncomfortable? Is there any illegality there? I don't think any illegality was necessarily found, but yeah, I mean, I think this is going to be-- this is just a question. Like, where do you cross the line between Elon Musk using his very powerful pedestal to boost assets that he seems to hold, or when does that cross the line into something that's actually illegal?

BRAD SMITH: I'm sure as well you have a pulse of what's taking place at Crypto Bahamas. What most notably should we be watching out for there? We're going to be checking in, of course, with our own David Hollerith, but a ton of chatter this week around several different topics, not just the major names that are going to be speaking at Crypto Bahamas, but also some of the major topics that they hope to kind of really advance some solutions around from that point and using that to really continue the momentum that we've seen thus far.

EMILY PARKER: Yeah, I mean, from what I've seen coming out so far, just a lot of the same topics that-- I mean, it seems like everybody's talking about Elon Musk all the time, you know? But I think some of the topics that we're seeing coming out of there are just the same topics that are big in crypto, the crypto industry, for example, the role of institutional investment and how that will affect price. You know, where's Bitcoin-- what's happening with the Bitcoin market right now? What's dictating the price? Why is the price staying in the same range for such a long time? So I think a lot of the topics, at least that I'm hearing out of there, are just the topics that are being discussed in the larger crypto industry.

BRAD SMITH: I mean, we've seen some massive price targets for even the end of the year. We're talking about $100,000 type price targets for the end of the year for Bitcoin. Is it likely that we've reached those points? And what would need to happen for us even to strike some of those levels?

EMILY PARKER: Bitcoin is so famously unpredictable that I can't really comment on the likelihood, but I would say, for Bitcoin to reach these very ambitious targets, something would have to happen, right? It doesn't seem like this would just happen organically, something that, you know, more Bitcoin specific. I mean, when we look at, for example, what has caused Bitcoin to break records in the past, a famous example is Tesla, right? Elon Musk's announcement about Tesla holding Bitcoin.

So there's generally something-- there would probably have to be some sort of catalyst. Maybe it will be a big institutional player. Maybe it would be something on the regulatory front. Regulatory news does have a tendency to move markets. But yeah, I would imagine we would need to see something pretty dramatic to happen.

BRAD SMITH: Emily, always a pleasure to speak with you and get your insights. And thanks so much for joining us here this afternoon. Emily Parker.

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