Against the backdrop of rising interest rates in the U.S. market, all asset classes are under selling pressure, and cryptocurrencies are no exception.
In addition, events such as the collapse of TerraUSD's stablecoin (UST) could contribute to the recent setback in cryptocurrencies, but one asset manager sees a recovery in the digital currency coming soon.
"I think we'll see [crypto] regain its footing in the near future," Michael Sonnenshein, CEO of Grayscale Investments, said on CoinDesk TV's "First Mover."
Grayscale, one of the largest players in the crypto space and sister company to CoinDesk, manages over $25 billion in assets.
Sonnenshein also noted that after the collapse of UST, one of the largest algorithmic stablecoins, stablecoins remain a concern in the ecosystem, even as they remain the backbone of crypto markets.
"Investors are focusing on issues such as stablecoin governance, supply securities and, over time, making sure that the stablecoins they are involved in actually work as they are designed to work," he said.
Much to the detriment of investors, tech stocks have also suffered from low trading volumes and selling pressure. Since the beginning of 2022, bitcoin (BTC) has fallen more than 35%.
Sonnenshein, however, does not believe the downturn will last. Like many in the cryptocurrency world, he sees the potential for a future upswing.
"I think the markets will continue to find their footing," he said.
GBTC, the company's flagship investment vehicle that hopes to one day receive approval to become an exchange-traded fund (ETF), is trying to attract those investors and hopes to receive approval from the Securities and Exchange Commission. GBTC currently trades at a discount of about 30% to its net asset value.
Ultimately, Sonnenshein cites a "function of market forces," including a liquidity shortage, contributing to the trading price of GBTC and Bitcoin.