After achieving the $1 trillion figure, the crypto market slumped and lost over $200 billion after Bitcoin and ether crashed by circa 12% and 23% respectively.
Following this sudden drop, billionaire and Shark Tank investor Mark Cuban compared the cryptocurrency market to the dot-com bubble burst of the early 2000s.
“Watching the cryptos trade, it’s EXACTLY like the internet stock bubble,” the owner of the Dallas Mavericks tweeted. “As during the dot-com bubble, ‘the experts’ try to justify whatever the pricing of the day is,” Cuban added.
But, Cuban admits that digital assets such as Bitcoin, which has risen nearly 300% in the past 12 months might survive despite the potential bubble bursting – similar to how enterprises like Amazon and eBay persisted during the internet stock bubble. “A few others will be analogous to [firms] that were built during the dot-com era,” and “survived the bubble bursting and thrived.”
While Cuban has previously invested in crypto businesses and in bitcoin, he deems it to be a gamble. “If you’re a true adventurer and you really want to throw the Hail Mary, you might take 10% and put it in Bitcoin or Ethereum,” he said in an interview with Vanity Fair. “But, if you do that, you’ve got to pretend you’ve already lost your money.”
Cuban adds that crypto – similar to gold – is driven by supply and demand. However, “[All] the narratives about debasement, fiat, etc. are just sales pitches. The biggest sales pitch is scarcity vs. demand. That’s it,” he tweeted. Admittedly, if one starts investing hard-earned money in crypto, stocks or other currencies which one “can’t afford to pay back”, Cuban said, “you are a fool.”
“Along the way, MANY fortunes will be made and LOST. There is a [99%] chance you will lose EVERYTHING. Personal disaster stories are built on leverage,” Cuban tweeted. “My advice? Learn how to hedge,” he advised based on his own experience during the dot-com boom. These recent tweets echo a similar comment from another interview with Forbes that Bitcoin is “a store of value…that is more religion than solution to any problem,” he said at the time.
Cuban’s tweets come just as the UK’s regulatory body issued a warning for consumers about the investment risks in cryptocurrencies, and that investors should “prepare to lose all [their] money.”
What crypto sector insiders think
Cuban is hardly alone in being bullish about Bitcoin. Investor Chamath Palihapitiya in a recent interview on CNBC’s “Halftime Report” predicted that Bitcoin will soar five-fold.
“Can you play the clip in 2012 and 2013 when it was at $200 and everybody was laughing at me on CNBC every time I would talk about Bitcoin? Where is it going? It’s probably going to $100,000, then $150,000, then $200,000,” he said.
While those in favor of bitcoin say it will serve as the alternative to US dollar and a hedge against inflation, and that despite its volatility it will be more valuable than gold, not all are convinced that the price will continue to rise. Time will tell whether bitcoin or any cryptocurrency will replace fiat or government-backed currency.
