Billionaire Mark Cuban’s predictions for this bear market are rather interesting. Cuban of Shark Tank fame has always been fairly outspoken regarding his investments. But which assets does he believe will weather the financial storm that is 2022? Let’s find out.
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Quotes from Cuban
Here are a few quotes from the world-famous investor that highlight the areas he believes will continue to perform well, even during a bear market.
“Bitcoin is a better alternative to Gold, and it’s going to continue to be. That’s why I own Bitcoin and never sold it.
Mark Cuban is a well-known proponent of cryptocurrency. Even going as far as stating that “80% of the investments that I make that are not on ‘Shark Tank’ are in or around cryptocurrencies”. Bitcoin frequently gets compared to gold for its use as an inflation hedge and Cuban seems to share that sentiment. That’s a pretty big sign that entrepreneur has faith that the asset class will survive the latest drop and likely thrive once the economy has some new life breathed into it.
“What really changed everything was smart contracts. They came along, and that created DeFi and NFTs. That’s what changed the game. That’s what got me excited. That’s why it’s a lot like the internet.”
Other than Bitcoin, Cuban seems to be a fan of Ethereum and its smart contracts along with the Decentralised Finance (DeFi) sector. Both are revolutionary, smart contracts allow applications to operate independently and interact with the blockchain, and have given rise to NFTs and hundreds of crypto projects. DeFi aims to shake up the finance sector and make it far more accessible to the everyday person.
“As long as more companies take Doge for products/services, then Doge can be a usable currency because it MAY hold its purchasing value better than a $ in your bank. If interest rates skyrocket or the amount spent falls or stagnates, so will Doge. Yes, a joke is now legit.” (via Twitter @mcuban)
Dogecoin (DOGE), a project originally created as a joke, has also garnered the attention of the investor. With an increasing number of companies accepting DOGE as a form of payment due to its low-cost transactions, DOGE could be pushed higher if adoption continues.
“The number of transactions and the diversity of transaction types along with the development efforts in Ethereum dwarf Bitcoin. The utilization of Ethereum is much higher.” (CNBC, May 2021)
It seems Cuban prefers Ethereum over Bitcoin as the network has far more interest from developers. As a layer-1 crypto (a network that facilitates the creation of other projects), the price of Ethereum is directly impacted by the number of transactions on the network. As more projects are created within the Ethereum ecosystem, the demand for ETH will grow.
“Like Buffett says, ‘When the tide goes out, you get to see who is swimming naked”
In one of Mark Cuban’s predictions, he quoted Warren Buffett alluding that a shake-up was exactly what was needed to force hype-based projects out of the market and put the emphasis back on utility-based assets. During bull runs, projects can skyrocket through nothing but hype and perceived value. However, during bear markets, only companies/cryptocurrencies that provide actual value will survive. If a project solves a real problem, there will always be demand. However, projects with nothing to offer other than fancy marketing will inevitably fizzle out as investors try to conserve cash.
Mark Cuban’s Predictions
It seems Ethereum is near the top of Cuban’s list due to its smart contract capabilities. Then comes Bitcoin for its long-term performance and use case as an inflation hedge. DeFi projects also seem to have the investor’s attention, which makes sense as anything that improves the financial sector will likely have massive demand.
However, before the good projects can thrive, the weak ones need culling. Mark Cuban predicts that this bear market will do exactly that. Hype has pumped up a ton of stocks and cryptos which now need to fall back down closer to their intrinsic value before the next cycle begins.
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