Yahoo Finance's Zack Guzman, Brian Sozzi, Myles Udland, and Julie Hyman discuss Bitcoin's price crash.

Video Transcript

MYLES UDLAND: All right, welcome back to Yahoo Finance Live on this Tuesday morning. Stocks in the green, but crypto under pressure. Bitcoin trading below 30,000 at this hour. Yahoo Finance's Zack Guzman covering the crypto space for us, here to walk us through. Zack, what is going on in the crypto complex? We've seen not a lot of great things happening, but nothing too bad. Is this kind of discouraging the washout, perhaps, that some had been fearing?

ZACK GUZMAN: Yeah, I mean, Myles, I mean, we've talked about the $30,000 level being pretty important, not only just because, you know, at some point, it being that psychological nice round number that's held as support for quite some time. But a lot of the options activity has held around $30,000 as the price to watch there. And breaking below it, I mean, it has been support for a while. This is the first time we've seen Bitcoin dip below it in about a month's time. So it has been kind of that key level to, at least, provide a floor for Bitcoin to come back on.

But there are a few other stories out there that could be driving it, of course. We've already seen the China crackdown weeks ago that kind of began the downtrend here to get to this level. But last night, BlockFi, one of those big crypto lenders, out there, talking about a cease and desist letter coming from the attorney general of New Jersey around their crypto interest earning accounts and having to shut down to new clients in that state.

Pretty interesting when we think about the regulatory framework around some of those lenders that haven't been regulated as closely as we've seen banks in the past, since they aren't necessarily bank chartered. At least, in the case of BlockFi, certainly not a bank. But, again, kind of increasing that pressure back here at home for what regulation could look like, not necessarily helping out the negative headlines we've seen. And, you know, one of those things is going to have to be addressed.

So BlockFi is not the only one facing pressure. Of course, if they are going to be hit with a cease and desist, you've got to wonder what could happen to those other big lending platforms out there, too. But when you look past Bitcoin here, Myles, it's not alone in seeing that downward pressure. Overnight, some of those alt coins also taking some pretty big tumbles. Dogecoin, at one point, off more than 5%. You also had Cordano off about 7% there, too.

So we're going to be watching this as, you know-- if Bitcoin drops below 30,000, that's likely to put some downward pressure on the rest of the alt coins there, again, highlighting that 5% move to the downside in Dogecoin, even more for Litecoin today.

BRIAN SOZZI: And Zack, talk about pressure. I'm just toiling around with Coinbase on Yahoo Finance Plus here. And the stock's down about 35% over the past three months, down 2% today. Is there any good news coming at Bitcoin? All we've heard is bad news over the past month and a half, ever since you went to that conference. What did you bring back?

MYLES UDLAND: It's Zack's fault.

BRIAN SOZZI: Zack, it's your fault. What are you doing?

ZACK GUZMAN: You know, I mean, I think, you know, I think the takeaway here, Sozz, is the people got what they wanted back when I was there in Miami. And it's just tough to live up to that, you know, when I'm out there with the crowd. But I think, you know, there are some positives here to look forward to. You can look at the [INAUDIBLE] rollout as Bitcoin catches that upgrade, expected to be rolled out later in November. A lot of people are excited about the abilities there to build some of these DeFi capabilities that have been focused there on Ethereum on the Bitcoin blockchain.

So that's something that people are looking forward to there, as well as maybe any around the regulatory framework. Of course, we've heard this before, and this is always kind of the pitch that the crypto community will give, is that these platforms are looking for some sort of framework to build on. And that would actually be a positive if we get maybe some of those regulations to come through.

Of course, it's tough to think about it in both directions. If you're going to blame it for the reason why we're now below 30,000, it's tough to see why that might be a positive moving forward. But that's what we've heard from some of these companies that just want these rules clarified so they can really start to work on achieving this. But there are some catalysts out there, Sozz. You know, aside from that, we have seen kind of the volatility come from that Chinese crackdown as miners come back onto the network.

Maybe you start to get some stability in terms of what it's going to look like, where that hash power has gone, where the hash rate's gone around the world. And you can kind of get adjusted, if you want to use the term-- we use it so much in traditional finance here-- the new normal-- what the new normal might look like here in crypto.

MYLES UDLAND: You know, Zack, speaking of things that we've heard before in the crypto space, I wonder if we are also starting to hear those 2018 rumblings again, which is, oh, good, this lets us really sort out who's serious about building things on blockchain technology. And the promoters and the hucksters, they kind of go away as the price goes down. Are we at that part of the cycle as well?

Because, look, I mean, DeFi is an extremely-- like, a lot of people in TradFi-- traditional finance-- are very excited about what's happening in DeFi. But the obvious port into, what do you buy today and how does that go up, is a little bit more challenging. And I think, of course, what most people were in crypto for is, oh, I buy anything, and it goes up overnight.

ZACK GUZMAN: Yeah, I mean, you know, the first thing that struck me about kind of this headline around the BlockFi crackdown in New Jersey, is that it would seem to [INAUDIBLE] everyone was so excited about DeFi in the first place, is that you don't have a centralized entity, like a BlockFi or a crypto bank, you know, being the one lending out and giving people interest on these accounts. That's why DeFi came around, is it's much harder to shut something like that down if it is, by definition, decentralized.

And these protocols are handling everything in terms of yield and calling these loans on its own. So you don't necessarily have the ability, if you are a regulator, to step in and maybe shut something like that down. That's why a lot of people were excited about it because it's not necessarily exposed to those same regulatory risks or centralized risks as a BlockFi might be. So I mean, I guess, something like this does kind of point to the need for those. And we'll see what happens if maybe, you know, some of those alt coins focused on the DeFi space can actually catch a boost off something like this.

But generally, as history has dictated, generally, it's wherever Bitcoin goes, these alt coins are going to go. It hasn't been the case that we've seen anything like that ever be able to go up as Bitcoin is coming down. So I think who knows? Maybe we could see that shift at some point if you continue to see funds flow into DeFi.

And of course, there's also the catalyst that we've always been waiting for, continually, perhaps, waiting till the end of time, for the SEC to greenlight one of those Bitcoin ETFs. And there is still hope that that could come through, perhaps maybe later this year. And if it does, maybe that's the trigger to get back up to above that $40,000 [INAUDIBLE] calls for a lot of people in the space that that could happen. But again, a lot of hopium out there right now in the crypto space.

BRIAN SOZZI: Hopium-- I have heard that term before. I have not heard TradFi. That is a new one for me, Zack.

ZACK GUZMAN: Well, that's Myles. I mean, TradFi-- you've got DeFi, you've got TradFi. I'm just waiting for SozzFi to get out there.

BRIAN SOZZI: Well, that's--

ZACK GUZMAN: So I can hop on that trend.

BRIAN SOZZI: That's next. I'll save it for your show next. All right, Zack Guzman, thanks for getting up early, bro.