As the crypto market tumbles, little is heard from crypto evangelists.
While not strictly speaking an evangelist, billionaire Mark Cuban has invested in the industry. He believes in its future.
But Cuban, as a seasoned investor, has also kept all his lucidity. In a recent interview with Fortune, the billionaire entrepreneur said tha the crisis that the crypto space is currently going through will make it possible to sort out valid projects from those that are based on nothing.
“In stocks and crypto, you will see companies that were sustained by cheap, easy money—but didn’t have valid business prospects—will disappear,” Cuban said. “Like [Warren] Buffett says, ‘When the tide goes out, you get to see who is swimming naked.”
Bitcoin, the king of cryptocurrencies, has lost more than 70% of its value since November 10, the date of its all-time high of $69,077.44. The most popular cryptocurrency is currently trading at around $20,657.77, according to data firm CoinGecko.
Ether, the second-largest digital currency by market cap, is down 77.6% from Nov. 10 when prices hit $4,878.26. Ether is currently at $1,094.06.
This collapse is explained by fears of recession which push investors to liquidate risky assets while the Federal Reserve aggressively raises its rates to fight against inflation at the highest in 40 years.
But this is also due to internal scandals in the crypto industry. In May, sister tokens UST and Luna suddenly crashed, causing at least $55 billion to disappear, after UST lost its peg to the dollar, the foundation of it qualifying as a stablecoin — which is a cryptocurrency tied to a more stable asset like the U.S. dollar or gold.
UST is an algorithmic stablecoin, which is backed not by dollar reserves but rather by its sister asset Luna, which had to be burned, or permanently destroyed, through a computer code.
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Cuban Remains a Crypto Believer
A month later, crypto lender Celsius Network suddenly froze fund withdrawals from its platform. Since then rumors of insolvency have been circulating about the firm. Celsius has remained silent on these rumors.
Despite this bad news, Cuban remains optimistic about the future of the crypto industry.
“Disruptive applications and technology released during a bear market, whether stocks or crypto or any business, will always find a market and succeed,” he told Fortune.
He also said that cryptocurrencies are related to the Nasdaq. Tech stocks and Bitcoin have moved in tandem lately.
“If rates go up, it will struggle till it’s priced in,” Cuban said. “The exception, as with stocks, is for new, game-changing applications.”
Cuban calls himself Ethereum maximalist, which means he favors the platform over other Blockchains.
The billionaire likes Ethereum because it’s the most used blockchain, and the platform has smart contracts, a piece of computer code that determines the terms of a transaction (loans, trading, etc.) and don’t rely on any third party.
“Every crypto investor or speculator should use these 4 factors to understand risk for any token,” Cuban posted on Twitter on June 10.
He also owns other cryptocurrencies and non-fungible tokens (NFTs).
Cuban has invested in blockchain companies.