Crypto: Altcoins like Shiba Inu gain prominence but remain on shaky ground

Yahoo Finance's David Hollerith joins Emily McCormick to explain the appeal of cryptocurrency altcoins, such as Shiba Inu coin, due to their market caps, even if they do not remain universally accepted.

Video Transcript

EMILY MCCORMICK: Bitcoin prices hit a record high of over $68,000 earlier this week. But it hasn't been the only cryptocurrency to see a price surge recently. For more, we're bringing on Yahoo Finance crypto reporter David Hollerith. And David, it's getting tough to keep up with the litany of altcoins that have exploded in popularity recently, from Shiba Inu to Solana and a ton of others. Break down some of the major movers for us and what's been behind this jump in interest.

DAVID HOLLERITH: Yeah, well, Emily, I think I'll start by just pointing out that recent data from the blockchain company Chainalysis has actually suggested that cryptocurrency exchanges that offer a wider variety of assets tend to receive more money. So this is something that's probably on the minds of a lot of business owners that are facilitating trading in cryptocurrencies.

Now, take note of what I'm saying as financial advice, I have a shaky understanding of what I'm talking about at best. But Bitcoin, Ethereum, maybe a few others such as Solana, Ripple, are more of a sure bet. These high market cap coins are much better for newer investors. And to be honest, you need at least some time to prove out these coins before hopping into them.

Now, I've been wrong plenty of times before, but when investors start looking at cryptocurrencies with smaller market caps, they run the risk of buying something like Squid Coin, the scam named after the popular and horrifying Netflix series that rug pulled investors back in October. For the sake of exploring the world of this lesser known smaller cryptocurrency market, you have to look at something like New York Coin.

Now, New York Coin was minted in 2014. Yesterday, it had a bit of a pump, we would call it, thanks to previous news from Eric Adams, the mayor-elect, who has endorsed cryptocurrencies. Now, Mayor Adams last week said that he would take both of his crypto-- he would take his first three paychecks in Bitcoin. Following that, a cryptocurrency project in Miami, Miami Coin, it said that they would also mint a New York City coin, and Adams has endorsed that.

Now, New York Coin has nothing to do with either of these projects. Yet its name has created a pump in the market. And the coin, the small micro-cap cryptocurrency is up-- was up by about 70% last week. And now, it's down by 50%. Now the thing is here we don't have a chart for this because this coin is so obscure, there's literally not reliable data we can show. But the point here is that there is a litany of new cryptocurrencies to keep up with. And investors, especially those who are new to the market need to be aware of this and look at the higher market cap cryptocurrencies that have had more time to be tested out as true.

EMILY MCCORMICK: And David, perhaps a sign that at least some of these altcoins are becoming somewhat less alternative and more mainstream has been that a US Senate candidate recently revealed that they are a proponent of the Shiba Inu altcoin. What are the details there?

DAVID HOLLERITH: Yeah, so I spoke with Shannon Bray yesterday, and he's actually one of, I would say, probably at least five, if not 10, senatorial candidates or people running for Congress who are somehow signaling that they're interested in cryptocurrencies or accepting cryptocurrencies as political donations, anything like that. So this is a huge gamut of-- within politics now. You need a cryptocurrency dimension.

And Adams is the perfect example of this, but Bray, who is running for his district in North Carolina, he's become a wider fan of the Shiba Inu army because his following in the last two months has grown substantially after he made a donation actually to struggling veterans in Shiba Inu tokens. And that donation has obviously increased a lot over the last two months, with Shiba Inu rising a lot in value. So I have a story on that that I can share more on, but the end result sort of is that still, even a lot of these politicians who might be signaling their acceptance of cryptocurrency in some ways can boost the price of these coins without knowing it.

EMILY MCCORMICK: All right, well, definitely a lot to be keeping track of in the crypto space, but Yahoo Finance's David Hollerith, thank you so much for breaking that down for us.