Stablecoins are bedrock of crypto trading: Tether Co-Founder

William Quigley, Magnetic Managing Director and WAX Co-Founder, Tether Co-Founder joins the Yahoo Finance Live panel to discuss the latest in the cryptocurrency space.

Video Transcript

ZACK GUZMAN: Welcome back to Yahoo Finance Live. In today's Crypto Corner, we are taking a look at the major cryptocurrencies here. And Bitcoin continues to trade pretty range bound in that mid $30,000 level. We are seeing Ether trade around 2,500. And we talked a lot about that 200-day moving average for Bitcoin around 40,000. More calls, including from Fundstrat Tom Lee, saying that if we break that $40,000 level, we could see pretty quickly 50 grand Bitcoin next. And for more on where we're at in this adoption cycle this time around here, I want to bring on a man who knows all of these cycles very well, given his time in the crypto world. The co-founder of Tether, as well as Magnetic Managing Director, William Quigley joins us right now. William, appreciate you taking the time, man. Yeah, really excited to chat with you--

WILIAM QUIGLEY: Of course.

ZACK GUZMAN: --about all this stuff. And let's just, you know-- let's take a big picture of you here about where we're at because it doesn't necessarily seem like the steam is completely out of the cycle here, especially if you look back historically. But what are you seeing maybe around institutional investors and in this adoption cycle at the midpoint of 2021?

WILIAM QUIGLEY: Sure. Yeah, if we're talking specifically about Bitcoin, obviously, it had a tremendous run from the halvening that is when the amount of rewards a miner gets dropped in half back in May of last year. And traditionally, about six months after a halvening event, so this would have been November last year, Bitcoin tends to be on a tear. Historically, up 300%, 400%. And that is what's happened in this cycle as well.

And I think that usually lasts for about 18 months. So we probably have some time through the end of this year to see Bitcoin continuing to rise. There was a consolidation in the past few weeks. It went up from 30,000 at the beginning of the year to 64,000. And it's pulled back by about 40%. But it's still up 20% for the year, which is darn good, even if we're for the full year. And in this case, it's just for five months in.

So I see Bitcoin continuing to do well. I think there's a lot of resistance for dropping below 30. And as always, with these sorts of tokens, cryptocurrencies, I always recommend if you're going to hold them, you should hold them for several years. Because in any given quarter or two, it could drop. And it could drop by 50%. But long term, the trends look really good. What's more, institutional investors will be coming in this year.

ZACK GUZMAN: Yeah, if I had told the graduation present I got from my brother back in 2014, I would be a lot sadder right now watching this run-up from those price levels. But when we talk about the fears maybe in the space, it's interesting-- and I'm happy to have you on here as a co-founder of Tether. Because we've heard a lot about stablecoins in this environment and when it comes to fears in the crypto world, that might be one that people point to, given the way that, you know, Fiat and the connection to the Fiat world isn't supposed to be there. Tether, supposedly, you know, addresses itself and says that it's backed 1 to 1 by the dollar.

In the early days, we've now seen kind of the disclosures around what that looks like now. I know you're not necessarily attached to the project now. But you've kind of spoken about some of those issues in the past. And we've heard from Fed Reserve Governor Lael Brainard talking about some of the issues around stablecoins and the issues it could pose for the entire financial sector if that connection is broken. I mean, what do you make about the way stablecoins play into this year and kind of how Tether and other ones seem like a short-term stopgap until the Federal Reserve or other countries issue their own currency-backed stablecoins?

WILIAM QUIGLEY: Yeah, what I'd say is, first of all, stablecoins are the bedrock of crypto trading. Many, many trading pairs between most of the cryptocurrencies are paired with Tether, which, of course, is the dominant stablecoin and has about a $60 billion market cap and trades trillions of dollars annually. People like stablecoins because periodically, they want to reduce some of their exposure to the volatility of cryptocurrencies. So tokenizing Fiat, tokenizing dollars or yen or euros, and being able to hold your crypto position in a stable currency until you want to dive back in is a fundamentally important part of crypto trading.

And in DeFi, Decentralized Finance, stablecoins are a bedrock of what makes that work. So stablecoins are going to be around for a long time. As far as central bank digital currencies go, I believe within 10 years, the top 20 global economies will all have tokenized their currency. Because there is simply no downside to doing it. China will be first, maybe Norway or Switzerland second. The US is catching up, but far from being a threat to the dollar, it's actually a wonderful mechanism for the dollar.

Because the stablecoin doesn't replace the dollar. It simply allows the dollar to be more portable. It's equivalent to digitizing the dollar, which happened 50 years ago, which is why you can use PayPal and Venmo. And you can wire money because it's digital. Tokenization is just a better form of digital. And I think all the central banks will do it.

Now whether or not the existing stablecoins that are out there now that have been issued by private enterprises, those go away or not, I don't know. It'll probably depend on how restrictive the central banks are in the usage of those stablecoins. If they are very permissive, then I think you won't maybe need a Tether. But if they're not-- and I think many of these countries and central banks will initially not be so permissive-- then Tether and these other stablecoins have a very bright future.

ZACK GUZMAN: Yeah, and, you know, obviously, Facebook also working now. They've hedged their project in Diem to kind of focus in on the stablecoin space. So very interesting to see one of those trusted entities, if you want to call Facebook trusted, working on the stablecoin space.

WILIAM QUIGLEY: Sure.

ZACK GUZMAN: When we talk about maybe the extreme opposite of that, a stablecoin backed by the dollar supposedly, always supposed to be $1, not necessarily very volatile, to the other extreme, which would be NFTs, I suppose, completely detached from fundamentals and underlying fundamentals there. You seem very bullish on the NFT space, even despite the fact that we've seen maybe some prices in terms of recent sales come down a bit. What has you so excited about NFTs, and what are you seeing there that might point to continued strength in that space?

WILIAM QUIGLEY: Well, part of it is I launched an NFT blockchain in 2017 called Wax, and it's now the top one, two, or three most traded blockchain, period. But definitely number one in NFTs. So I see this stuff every day. The prices that were originally these NFTs were going for, particularly on Ethereum, were actually kind of silly. It didn't really make sense to me. It was a novelty. I think there were a lot of people who had seen their Ethereum tokens go up 40x, 40 times in value, over the last 15 months. So they had a lot of free money, and they wanted to spend it.

But the real interesting area of NFTs is not the million dollar-- or the $50 million NFT. The more interesting area is at the traditional consumer mass market level, like what Wax does. They're $1 to $5 per NFT. And think of it like opening baseball card packs, but they're NFTs, digital cards, as opposed to a physical card. I think a lot of people enjoy that. They enjoy the experience. They enjoy trading. And sometimes, if you get a randomly rare card, it could be worth a lot of money. But you're not speculating with hundreds of thousands of dollars, which is what we've seen on some of the Ethereum-based NFTs.

That, to me, probably will ebb and eventually start to fade. But there is so much more growth in the NFT because major, major consumer brands are now looking at this as a new channel to get their brands, their intellectual property movie characters on the blockchain. And that has multiple years more to go, particularly when you layer on augmented reality-based NFTs, which are coming. I think the consumer experience, when you mix video, voice, music, and augmented reality all on an NFT, a digital token that you know is genuine, that's the difference between, like, an emoji you trade, I think that's got a lot a lot of legs. And it's a global phenomenon as well.

ZACK GUZMAN: It's still very early on in it, too, to kind of talk about these booms and busts. Still quite early to get into all of that. But the co-founder of Wax and Magnetic managing director, as well as the co-founder of Tether, appreciate you coming on here to chat. William Quigley, thanks again for the time. Be well, sir.