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Gary Gensler has once again voiced concern over the crypto industry, stating that most digital assets are driven almost entirely by market sentiment rather than solid fundamentals.
In a recent appearance on CNBC’s Squawk Box, the former Securities and Exchange Commission (SEC) chair warned that this makes many altcoins vulnerable to sudden collapse.
BTC’s Long-Term Value
“If you were interested in [crypto], think about [how] every financial asset sort of trades on a bit of fundamentals and sentiment, but this field is almost 99%, or maybe one might say 100%, sentiment and very little on fundamentals,” Gensler said in the interview.
He was quick to warn that most digital assets may not be very useful:
“I don’t think we humans will have a fascination with ten or 15,000 memes or sentiment tokens trading over the years,” he said.
He, however, added that it was important for individuals to assess their personal risk and examine the underlying fundamentals, noting that tokens driven solely by sentiment often perform poorly and tend to decline.
The MIT lecturer also separated BTC from other altcoins, acknowledging that the flagship cryptocurrency might endure because of worldwide interest.
“Bitcoin may persist for a very long time because there’s 7 billion people around the globe with real keen interest in it.”
Additionally, Gensler likened Bitcoin to gold, noting that although there are numerous metals, public interest generally concentrates on the most precious, gold and silver.
Gensler’s Comments on Tariffs and AI
Beyond crypto, the 67-year-old weighed in on the U.S.-China tariff landscape. While stating that the United States maintains the deepest and most liquid markets globally, he linked recent financial market volatility to policy uncertainty. Only last week, digital asset investment products experienced record outflows of nearly $800 million as markets grappled with tariff issues.
Reflecting on his own negotiations with Chinese officials, he noted that although China did not always follow established rules in the past, bipartisan efforts had led to agreements that the country has largely honored.
However, the former SEC official cautioned that the current tariff situation could escalate into a “quagmire,” stressing the need for consistent, respectful, and private diplomacy. He explained that China often disengages when confronted with inconsistent policy messaging.
Now back at the MIT Sloan School of Management, Gensler is teaching and researching Artificial Intelligence (AI) and Finance. When asked about the growing use of AI in crypto trading, he described it as “the most transformative technology of our times,” noting its growing impact on finance, investment management, underwriting, and trading.
He projected major changes in the next five to twelve years, driven by algorithms with humans still playing a role. However, he noted that AI is not yet fast enough for high-frequency trading applications.
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