Hi everybody I'm Brittany Lewis a breaking news reporter here at Forbes joining me now is Stephen Ehrlich director of research for digital assets Stephen thanks for popping on great thanks Brittany pleasure to be here in your latest crypto newsletter you offered an outlook on the cryptoMarket we're two months in now to 2023. can you give us a sense of how the crypto Market's looking yeah so so far it's it's looking pretty good the crypto Market has gotten off to a roaring start in 2023 I mean Bitcoin ether both jumped up around 35 40 inJanuary many major altcoins saw similar gains some outperformed considerably uh especially ones that are focused on scaling ethereum or this this new fat and crypto code liquid staking which we can get into uh in a little bit if you'd like but one of the things that I reallyTried to call out in my newsletter is the idea that this is a time where people need to be careful uh a real warning sign that I saw is that despite Bitcoin and ether's surges in January they were mostly flat on they were mostly flat in February and to me thatMeans that most investors especially the professional ones the quote-unquote smart money are really trying to figure out where the Market's going to go next I mean just remember we're still in record high inflation we're still dealing with record high inflation um the economy while when it's roaring it's usually a good thing theStubbornness of excuse me the stubbornness of employment is actually raising fears that the FED is going to have to keep raising rates uh a few weeks ago it was almost unanimous there was almost a unanimous belief that the federal is only going to raise rates by25 basis points at its next meeting in March now fears are starting to creep up that it's going to go up to 50 basis points and that there could be a subsequent race uh after that which would not only delay a period of time for the red where the FED will holdRight steady but we might not see our first declines until 2024 and so we're in this tenuous environment but but at the same time there are some tokens that are surging to exorbitant levels without any real reason why and and I'd like to talk about about a few of themUm for instance uh there was a whole Suite of artificial intelligence related tokens that are doing nothing more than piggybacking off of uh all the hype for lack of a better word the chat GPT that that chatbot that Microsoft invested 10 billion dollars in uh has all that hypeThat it has accumulated to be very clear chat GPT has no token and and also most of these artificial intelligence related tokens uh don't have much use right now anyway and and there are some very real reasons why artificial intelligence and blockchain may not necessarily go together as wellAs some as well as some people are hoping so anyone looking to buy any type of crypto token to get exposure to artificial intelligence uh I would certainly be very very wary of because uh if there is going to be any type of payoff it's likely not going to be yearsUntil it's not likely not gonna be years until then and in the meantime you're buying at a peak hype cycle where more likely than not you're going to be a sucker or somebody that bought the token earlier or held it on and is selling toYou at a nice profit you're going to be the one left holding the bag so so be very careful about that and um on top of that they're a security firm called pep Shield actually noticed that there are more than 100 tokens out there with the name GPT somehow in itAnd and again Peak hype cycle there's going to be charlatans there's going to be fraudsters and and they're chat gbt has no token has no affiliation with blockchain at all at least for now so anyone buying those tokens is clearly just buying vaporware um you're buying something that'sFraudulent and you're likely going to lose all your money so that's just um that's just one example of kind of the frothiness in this market that people need to be careful of Stephen you said there is no token for Chach EBT yet it's in hundreds of tokens names can you talkAbout the legality of this it sounds like fraud yeah I mean it could it could be fraud um um if nothing else it is definitely wrong um the the pro the beauty but I guess the problem with open source technology like like crypto and and blockchain isIs that anybody can create a token with any name I could create a Steve coin tomorrow you could create a Britney coin we could create a token saying Eagles Super Bowl 58 Champion token um the next day which would which I know we're all hoping for and there's there's nothing there's nothing necessarilyIllegal about it I mean once you start infringing upon someone's um some someone's trademark someone's copyright um certainly then that could lead to uh legal issues but at the same point many of the people that are issuing these these fraudulent tokens uh they're synonymous they're Anonymous names on onThe internet um it's hard to figure out exactly who they are most of them will probably abscond with the funds before anyone's able to really track them down and to be perfectly honest in most cases the the money involved is not big enough for a company like Chad you could hearMicrosoft to really to really care about so um it's definitely wrong it likely is some sort of uh of I guess like IP property rights infringement but at the end of the day there's not going to be much recourse for individual investors that get burned on something like thisSounds like it's pretty easy to get duped and you issued some pretty blunt advice in your newsletter that I would want you to dive into and that advice was don't be a sucker why is it such an easy time for people to be a sucker right now and I guess later in theConversation we can discuss how they can protect themselves yeah it's just it's easy because I mean there's a lot of different it's kind of a perfect storm right now for people to get caught up again in the fomo the fear of missing out we're all licking ourWounds from 2020 unless you have your entire portfolio in cash and it's it's exciting to see the markets jump in January uh it's enticing to want to try to regain everything that you lost quickly but at the same time that's not necessarily how things work and the slowAnd steady is what wins the race and you really just need to these are times where you need to be cold and calculating when it comes to when it comes to investing Stephen so what red flag for to protect themselves right so so there are a few easy thingsThat you can do to make sure that you're not um you're not being fooled that you're not buying a token to a project that doesn't exist or you're not buying um a knockoff token for a project that does exist so a couple things that youCan do for one if you hear about some new token Nike coin and that's just a for instance or Tesla coin or uh or or something like that you can go directly to this company's websites look at the social media the verified social media for the founders uh check reputable news sources likeForbes to see if we're covering it for instance if Tesla ever launches a digital token we will 100 cover it uh if if you're not seeing some of those things there's a good chance that the token is is fraudulent or or knockoff so that's one thing that you can do two ifYou do find out about a new project a big company some sort of new token out there and you want to get involved make sure that you buy the right one if there is ever going to be a Tesla token likely it's going to be issued on one of theMore mainstream blockchains like ethereum so if you start seeing Tesla token on a very random blockchain that has just a few users uh it's probably not the exact one or if you do see something that looks like a Tesla token on ethereum but the name is slightly wrong the name is slightly differentAgain make sure that you're buying the the right one and that can be a little bit more sophisticated that can be a little bit more challenging to do but at the same point on that company website there's usually um there's usually documentation that you can look for there's usuallyUm some sort of address that you can there's usually some documentation that you can look for if you want to buy a particular token directly from an issue where make sure that you're going to a legitimate website that has appropriate website security and then if if nothing else from that uhBuy those tokens on centralized exchanges like like coinbase Kraken Gemini ones that are legitimate regulated and I know go through strong due diligence processes to make sure that they list they list authentic tokens sometimes people look to get ahead of the curve by buying tokens on decentralized exchanges um there there'sMany out there the biggest one is is unit Swap and I'm not calling them out in any particular way and and those there is really no listing criteria people can put up anything that they want and that's often where people can get into trouble if they're trying toBuy a token that looks or sounds like a legitimate one but may actually be a knocked off so that's so that's another thing that you can do and and then third and this is more geared towards tokens that have been around for a little while but are pumping or surging for aParticular reason make sure that there's a real legitimate uh explanation for what you're saying in these topics and this kind of goes back to some of those AI uh Focus tokens out there that that are surging uh see if there there's a legitimate reason like like a major new partnership orDramatically forward in in the technology and and that it's not just um Market excitement that's driving a token forward because again uh it's very hard to try to time the market I know some people may say well I have this token I bought it here I'm gonna sell it here toSome to someone else that's very difficult to do and I always recommend that when uh people invest in crypto they think about it from a five to seven year time Horizon and fluctuations of the market are going to get smoothed out over that period of time so um reallyTry not to get too distracted um by market movements that cannot necessarily be easily explained I like your advice here do your due diligence if something's too good to be true it probably is but something that you said earlier in our conversation really stuck out to me and that was we're stillLicking our wounds from 2020. in January we saw a bear Market rally and you're sounding decently optimist Mystic about crypto in 2023 why is there so much volatility specifically when it comes to crypto yeah that's a really good question I am optimistic overall for crypto in in 2023Uh I I do hope and expect that we'll get some more regulatory Clarity and in the crypto Market um although 2022 was a bear market for everybody the crypto Market was disproportionately uh impacted because of because of the the bankruptcies that have been chronicled throughout the year thatWe've spoken about before and and all that again was um about was uh uh what's the word and punctuated by it by the FTX bankruptcy in in November now crypto is always going to be more volatile than um traditional asset classes for a coupleOf reasons uh it tends to have it has a much smaller um Market size total market cap than traditional asset classes I mean for instance the total crypto market cap has just now regained the one trillion dollar Mark again I mean we have individual companies that are worth moreThan all of crypto together and on top of that and especially once we start moving beyond like the big large cap cryptos that the Bitcoins the ethereums uh to smaller cap tokens that have total circulating supplies and the tens of billions or one billion or or below uhWe're dealing with much smaller floats we're dealing with a lot of high leverage derivatives trading especially overseas markets and all those types of things can kind of act like a like a sea salt or Whiplash which essentially which Market movements either to the downside or to the upside so all of those thingsTogether plus sort of the the sort of Damocles High the sort of Damocles hanging over all of us in the form of Regulation which can have outsized impacts on uh basically the viability of certain tokens the um ability for exchanges to list them that whole stew of different thingsTogether makes crypto just by the very different by its very definition more volatile sound decently optimistic so aren't being suckers said is this a good time yes or no for investors in the crypto Market 2023 as a whole I know we're only two months inYeah I mean I do think it's a good time because the market is is recovering um it has regained everything that was lost from the FTX collapse back in November and it's proven itself to be pretty resilient around the 23 000 24 000 range um despite the fact that thereWas some some near-term exhaustion and through our fears of a pullback to twenty thousand dollars or or below especially if the FED raises rates Again by 15 basis points in in March and and so on and so forth I mean we're not out of this uh I'm not going to call it aRecession because it hasn't officially been called a recession yet but but definitely a tenuous economic climate at the same time this is a good entry point for people to get into crypto because I I do see it as oversold still to some extent especially some of the bigger assets that theBitcoin and ethereum and I always um preach and I know we've spoken about this before too the ticket dollar cost averaging approach to to invest things so if you bought some throughout 2021 uh likely you're in the red now um if you kept buying in 2022 lowerEntry point if you're buying now still a little bit of a lower entry point so the average of all of it should hopefully be a decent midpoint that in five to seven years is something that you're a lot more comfortable with so uh this is I see this as a good opportunityUm to to make allocations towards crypto again um in consultation with financial advisors none of this is is financial advice and within your own personal risk parameters but but the price point for for certain tokens uh aside from the ones that I mentioned before that are just pumping for for different reasonsThat really have absolutely nothing to do with Market fundamentals for the for the major tokens this is a good time to get in Steven I already look forward to your next newsletter thank you so much for joining me great thanks Brittany