Valkyrie Funds, Ark Invest Say Crypto Has Hit ‘Bottom’ Amid Recession Woes

Frank Downing, director of research at Ark Invest and Steven McClurg, co-founder of asset management firm Valkyrie, joined “First Mover” to discuss the state of crypto, the economy and their respective crypto-focused separate managed accounts.

AccessTimeIconOct 7, 2022 at 6:53 p.m. UTC
Layer 2
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

On Friday the Labor Department reported U.S. job growth rose by 263,000 during September, which was better than expected but still lower than August’s 315,000 additional jobs.

So does the decrease in new jobs signal a change in Federal Reserve thinking, and how would that affect cryptocurrencies?

Asset managers, from Ark Invest and Valkyrie see crypto as having hit bottom, meaning it can go no lower in price, at a time when the Federal Reserve’s “tug-of-war” with the global macro environment could lead to continued interest rate hikes.

“Whether the Federal Reserve oversteps and makes a policy mistake, we’re essentially pricing in a recession,” Frank Downing, director of research at Ark Invest, said on CoinDesk TV’s “First Mover” on Friday.

Steven McClurg, co-founder of asset management firm Valkyrie, agreed, adding that “we’re definitely in a recession.”

According to Downing, bitcoin (BTC) is showing signs of “constructive developments,” referring to the small increase of “supply held by long-term holders.”

“The cost basis of those long-term holders has actually climbed above the cost basis of short-term holders, which historically has been a strong bottoming signal,” Downing said.

Nonetheless, crypto has “gone down more than the rest of the market,” McClurg said.

“The markets are clearly in a downward trajectory at the moment,” McClurg said. But “crypto is probably closer to the bottom than the S&P [500] or Nasdaq.”

In the near term, McClurg said, “prices will continue to go down across all risk assets until there’s a pivot from the Federal Reserve.”

The Federal Reserve's Federal Open Markets Committee is likely to raise interest rates by 75 basis points at its next meeting in November, followed by a 50 bps rise in December and then upwards of 25 basis points two times after that over the next year, predicted McClurg.

Crypto separately managed accounts (SMAs) to hit the market

Despite Downing and McClurg’s bearish outlook in the near term, the fund managers are optimistic about the future of crypto.

The two asset management firms have each launched individual crypto-based separately managed accounts (SMA), which will primarily be managed by financial advisors who will serve as intermediaries for investors.

“We take that risk on for them and we manage that risk properly,” McClurg said. “Additionally, we have set it up to where they can move in and out of that product very quickly through a redemption or an order process.”

Downing of Ark Invest, which recently said it would be working with Eaglebook Advisors to manage risk for its investors, is operating under a similar strategy where it takes on crypto risk while also holding onto the keys.

“Advisors will be able to invest their client funds with low minimums, [which] has direct integrations to existing portfolio management tools used by advisors,” Downing said.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Fran Velasquez

Fran is CoinDesk's TV writer and reporter.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.