- The crypto sell-off earlier this week was a "healthy capitulation," Jefferies' global head of equity strategy said.
- Christopher Wood said the price movements haven't undermined the bull case for blockchain technology and crypto assets.
- Wood noted that the "really exciting" aspect of blockchain technology is its decentralized nature.
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The cryptocurrency sell-off earlier this week that saw bitcoin plunge as low as $30,000 hasn't undermined the bull case for crypto assets and blockchain technology, Jefferies' global head of equity strategy said.
"This looks like healthy capitulation," said Christopher Wood in a Thursday note. "Recent newsflow has not undermined the bull case for crypto assets and blockchain technology even if there is legitimate room for debate about which crypto assets should be owned."
Wood noted that the "really exciting" aspect of blockchain technology is its decentralized nature which makes it more complimentary than other financial instruments to the practice of free market capitalism in responding to market signals.
He also said that the blockchain could be a long term threat to the Big Tech companies that dominate the market today. Blockchain enthusiasts say the technology will create a new era of the internet, dubbed "Web 3.0." Wood points out that in Web 2.0, users benefited, but all of the value extracted went to the owners of the platforms, like Alphabet or Facebook. With Web 3.0, the users of the platform will also be the owners, he said.
"This is why the blockchain has the potential to disrupt the Big Tech incumbents in coming years even if the latter continue to avoid, unlike their Chinese counterparts, meaningful regulatory action on the antitrust theme and related issues," Wood added.
Whether the crypto assets of today like bitcoin and ethereum become the dominant assets in the new era of the web remains to be seen, but the sell-off this week didn't worry the blockchain believers.
Bitcoin fell to just above $30,000 at one point on Wednesday, a more than 50% drawdown from its all-time high of nearly $65,000 in mid-April. The cryptocurrency has since rallied and is hovering around $41,000 as of Friday morning.