Crypto industry bails out bitcoin, NFT marketplace Magic Eden raises $130 million

Yahoo Finance crypto reporter David Hollerith joins the Live show to explain the bounce back seen in bitcoin's pricing after weeks of volatility in the cryptocurrency space and Magic Eden's rise to prominence as a crypto marketplace.

Video Transcript

SEANA SMITH: Some relief for crypto investors today, Bitcoin now trading back above $21,000 after briefly dipping below $18,000 over the weekend, hitting its lowest level that we've seen since 2020. David Hollerith is here tracking the price of crypto. And David, I guess, first, just explain what happened over the weekend and what you're hearing now from industry insiders, as we do see a bit of buying going on in Bitcoin.

DAVID HOLLERITH: Seana, I think we've got to take a step back just to look at last week. And you know, there were a number of crypto firms that were essentially forced sellers, where they were in overleveraged positions. They didn't have the capital up front, and they had to either liquidate-- have their positions liquidated or sell their assets to meet other requirements. So that's what we were seeing at the end of last week was a lot of forced selling, and that continued into the weekend.

Now, sort of buyer exhaustion stepped in on Sunday. And then around Monday too, there is more clarity of what we're seeing now as larger crypto companies coming in and essentially bailing out some of these troubled companies. The best example is FTX, the crypto exchange, has offered BlockFi, a crypto lender who has come under some troubles financially, to the tune of $250 million for revolving credit. So that seems to ease the market. It's-- the industry is essentially bailing itself out right now.

Now, obviously, all of this depends on the Fed and whether or not interest rates and balance sheet shedding will continue to send things lower, in terms of the value of risk assets like crypto. So that's something always to look out for and a good reason why we can't really call a bottom right now.

DAVE BRIGGS: David, you're also watching the NFT space. The NFT marketplace Magic Eden just announced a big fundraising round. Can't be easy raising money for NFTs in this environment.

DAVID HOLLERITH: Yeah, I mean, you have to wonder, you know, how far-- how long ago a discussion like this happened with Magic Eden.

DAVE BRIGGS: Yeah.

DAVID HOLLERITH: But the interesting thing to point out here is that they have had notable volume trading transaction growth on their platform for the past two months, which obviously have been really hard for crypto. So it's interesting. Magic Eden's sort of coming up as a contender as one of the larger crypto marketplaces. Right now, they only offer NFTs that are available on Solana, although they plan to use this funding to sort of make a change for that.

It's interesting to see, you know, how they're using NFTs, and it's not exactly how we think of your typical marketplace, just buying and selling. They offer a lot of gaming NFTs, for instance, which visitors to the platform-- to the website-- can come and play the video games without having to buy anything. So it's sort of a novel approach. You know, I think it just goes to show that we're going to see a lot of development in how NFT marketplaces sort of achieve value and attract customers, so.

DAVE BRIGGS: All right, very interesting stuff. David Hollerith, appreciate your time, my friend. Thank you.