Gary Gensler Critiques Crypto Market Sentiment, Highlights Bitcoin’s Resilience

Gary Gensler, former SEC chair, critiques cryptocurrency reliance on sentiment over fundamentals, highlighting Bitcoin’s potential to endure amid global interest. He warns against the risks of altcoins and discusses current U.S.-China tariff issues affecting markets. Gensler also speaks on the transformative role of AI in finance, predicting its impact over the coming years.

Gary Gensler, the former chair of the U.S. Securities and Exchange Commission (SEC), has expressed profound concerns regarding the cryptocurrency market. He emphasised that the majority of digital assets rely heavily on market sentiment rather than solid financial fundamentals, rendering many altcoins susceptible to abrupt declines.

In a recent CNBC interview, Gensler remarked that every financial asset is influenced by both fundamentals and sentiment, yet in crypto, the balance is heavily skewed towards sentiment, estimating it at nearly 100%. He cautioned against the proliferation of numerous low-value tokens, suggesting that a fascination with such assets is unlikely to endure over time.

He underscored the importance of individual risk assessment and a deeper understanding of the fundamentals, highlighting that tokens driven predominantly by sentiment usually demonstrate poor performance and often face declines. Gensler distinguished Bitcoin from other cryptocurrencies, suggesting that its enduring appeal may stem from its strong global interest, akin to gold’s status among precious metals.

Beyond his commentary on cryptocurrencies, Gensler addressed the current U.S.-China tariff scenario. He noted that while the U.S. has the most liquid financial markets, recent uncertainties tied to tariffs have led to significant investment withdrawals in digital assets. Reflecting on his experience with Chinese officials, he deemed that inconsistency in policy could lead to deeper diplomatic challenges.

Now serving at MIT Sloan School of Management, Gensler teaches about Artifical Intelligence (AI) in finance. He regarded AI as a pivotal technological advancement, predicting significant shifts in finance and investment management over the next five to twelve years, though he mentioned that current AI capabilities do not yet suffice for high-frequency trading applications.