As the crypto industry is closing 2020 at all time highs, BeInCrypto had the opportunity to catch up with Alex Mashinsky, the founder and CEO of Celsius Network. Jessica Walker’s captivating interview focuses on this year’s crypto performance, institutional investors entering the crypto space, and, of course, expectations from the industry, bitcoin price predictions and more.
Jessica Walker (JW): We’re ending the year on another hugely positive note. We’re seeing bitcoin (BTC) as the best performing asset, over the past ten years. How are you reviewing this year’s performance in crypto?
Alex Mashinsky (AM): Well, we were obviously tested a few times — once with COVID, and again, with some bad news that came out throughout the year. But you know, the ones who hodled did very well, and the ones who tried to trade probably did not do as well. So I think, the lesson is that no one really knows what the short-term price swings are, but in the long-term, bitcoin’s going higher.
My recommendation always was and still is that you just buy once a month, don’t worry about the price. Just take whatever spare cash you have, buy some bitcoin, put it aside. You can put in Celsius and earn some interest, for example. And basically, it will be higher in the years to come. So that’s really the strategy that worked very well. Bitcoin is up 9,000,000 per cent in ten years, so you couldn’t have done any better with any other asset.
JW: It’s amazing. It’s remarkable. One thing that I would love to ask you about is when we look at Uniswap setting an all time high traded volume, is this kind of thing that we’re seeing a migration to these kinds of exchanges, we’re seeing more of a decentralized finance push also?
AM: This year, we decided intentionally not to list in any of the major exchanges. So Uniswap is our main exchange, we’re also probably the largest participant on Uniswap providing liquidity. So we love this effort by basically a decentralized exchange to move all the volume from centralized exchanges of toll collectors to a platform that acts in our best interest. So we’ve been huge supporters of Uniswap since the beginning.
JW: I guess, one of the first things you read is don’t buy at an all time high. Where can people play out? How can people get involved at a time when they could say it’s almost looking too good to be true?
AM: We have three different assets in the Celsius wallet and one of them is a stablecoin — it doesn’t matter, the price doesn’t change, it’s always $1 to one stablecoin. The main advantage is that you can earn 10 per cent in interest, which is much more than you can earn in your bank. This is probably the best entry point for newbies, for people who kind of just experiment. Look, we have tokenized gold, so you can put some assets in gold and basically still earn five and a half per cent interest on it.
And you can buy some bitcoin or ethereum and put a little bit in that. If you buy it every month, just a little bit every month, your average price will be lower than where it’s trading, you’ll be earning 6 per cent interest. I mean, the goal is for you to have enough income to pay for all your expenses. The interest income — what you get every month — should be more than what you’re spending every month, and then you have financial independence.
JW: So it sounds like it’s really targeting the end user. Do you have plans to get into attracting more institutional investors?
AM: We have. So, first, we have over 350 institutions that are already customers of ours. And in most cases, they are the borrowers, they are the ones paying the interest. So we have a quarter of a million customers who receive the interest like you do. You receive that interest on Monday. The people who paid that are institutions that are using these assets for hedging, for arbitrage, and so on.
So we basically take this little known business on Wall Street called “sec lending,” or “securities lending,” and recreate it in the crypto community. And so we generate income from Uniswap, we generate income from other exchanges, we generate income from institutions. And we aggregate all that together and pay it every Monday to our community.
“I personally have over $160 million worth of my assets on Celsius right next to yours. So if you have bitcoin, I have bitcoin right next to you earning exactly the same amount of interest, I earn 6 per cent, you earn 6 per cent, right. So we don’t treat anyone differently no matter how big they are. And that’s really the beauty.”
JW: We saw MicroStrategy and also Grayscale coming out this year, which was really big news. Do you think we are in an institutional bubble? Do you think they are kind of the main players here, and is that set to change in the next few years?
AM: I think we are at the beginning of institutional adoption. If you look at how many institutions have done this, it’s very small. It’s just a very small fraction of all the people that I expect to join us in the future. So the ones who are already participating, and are the early adopters, and there’s some of the most famous investors in the world.
And you know that there’s 10,000 other institutions who haven’t done that yet. It tells you that you’re early, so anyone who feels that they’re late, or already missed the boat, they don’t really understand what’s happening here. So, again, I don’t recommend you to jump and throw everything in and hope that it’s going up from here. You need to allocate, and you need to diversify between the assets, stablecoins.
And what service Celsius does, it allows you to borrow against the assets. You don’t need to sell your bitcoin, you can borrow at 1 per cent and pay your bills or do whatever you need to do. And then you go back to normal. So those are all services that protect you right there. Celsius is trying to act in your best interest and protect you from making the mistakes that many of us do when we start feeling guilty, because we’ve done too great trades, and we feel that every trade is going to be a great trade, and then we take too much risk and we get wiped out and we go back to basics.
JW: If we actually look at the market dominance we are seeing, I think, at the moment, it’s 75 per cent of people who are buying and 25 selling ratio for bitcoin. Would you ever advise for people to sell their bitcoin assets completely? It sounds like what you’re saying here is accumulation is very important, you should always have some bitcoin.
AM: Yes. If you have spare cash, you should be buying every month, no matter what the price is. Because, again, we can have new all time highs next month, right? It doesn’t mean that we already hit the highest price.
So this spike that we just had there, where we went to $23,500, almost a billion dollars of that was just short covering, meaning it’s a one time momentum. New institutions are coming in or whatever, all the shorts got wiped out. Well, there’s no more shorts, right? That’s it. So we are probably going to have a correction here.
JW: If I was to give you, say, $10,000 worth of stablecoin on an exchange, at this point, where would you look at positioning yourself, as we are moving into this new year?
AM: So assuming you already have all your stocks, and real estate, and everything else, and you just have $10,000 to allocate, I would put probably — again, depending on your age — a lot of that in bitcoin, if you’re in your 20s, or 30s. Maybe 50 per cent in bitcoin and ethereum, and then 25 per cent in gold and 25 per cent in stablecoins.
If you’re more in like, towards your 50 or 60 years old, I would allocate more into gold and cash, stablecoins and cash, so maybe 60 per cent in those two assets. And then, 20 per cent in bitcoin and the rest in other alts. So it really depends on your age and how much capital you have, outside of this location.
And hopefully you are using that additional capital to pay off your high interest, credit cards, versus spending even more. And over time, you will basically get to the point where you paid off all your debt, and you’re starting to accumulate assets, and those assets are appreciating and they are earning yield that is compounding.
“This is the secret of Warren Buffett, this is the secret of some of the best managers in the world, the compounding effect of all of their assets, and you can achieve the same thing.”
JW: So if we look at 2021 of both price predictions, but also maybe just some market developments, what are you expecting or anticipating from this industry?
AM: I’m very, very excited about the developments both on DeFi and other aspects of crypto. And I think there’s a lot of regulation coming next year. So a lot of governments, a lot of jurisdictions are going to basically put down their foot and decide, like France just did where everybody has to do KYC no matter if you’re DeFi or CeFi.
We are also going to have a few big winners. I think Coinbase and a few other companies are going to go public. Bitcoin and ethereum and other projects are going to basically have to prove that they can mature and handle thousands of new institutional players and millions of new retail players coming in.
So from a price prediction standpoint, I think what no one really knows is how many sellers we have at the $25,000 level, $30,000 level, $50,000 level. I’m more guarded than others who are predicting $100,000 for bitcoin. I saw Guggenheim predict $400,000 for bitcoin. Price may reach those levels in five or ten years. But I’m predicting $30,000 to $35,000 price levels for bitcoin for next year, because I do think that we are still mostly an army of speculators.
And a lot of these speculators are going to sell their bags at higher prices, they’re not going to hodl. If most of the community was hodlers, then I would tell you we’re going to $100,000. But my feeling is, unfortunately, that many of them are the traders, the guys that think they can time the market, they’re going to be dumping. The higher the price goes, the faster they’re going to be dumping.
JW: Fantastic. Well, Alex, thank you so much for your insights. It’s always a pleasure to catch up.