The billionaire crypto investor acknowledges that there are still tough times ahead for most financial markets, but says everything will be fine as long as the crypto space brings forth new technologies.
Crypto billionaire owner of the Dallas Mavericks, Mark Cuban, says the current downturn in the market reminds him of a famous Warren Buffett saying.
Cuban sees a parallel between the rise and fall of crypto markets and projects, and the 91-year-old Oracle of Omaha’s aphorism says, “Only when the tide subsides will you discover who swam naked.”
Cuban’s observation was revealed during an interview with Fortune on Thursday, in which he discussed what he sees as the flawed business models of some crypto projects that have fallen on hard times over the past two months.
“In stocks and cryptocurrencies, you will see companies that were clinging to cheap, easy money but had no real business prospects disappear,” said investor Shark Tank:
“As [Warren] Buffett said, ‘When the tide goes down, you’ll see who’s swimming naked.’
Companies that swam naked included Terra, Celsius and Three Arrows Capital.
The Terra ecosystem, now known as Terra Classic, had completely collapsed in mid-May. The aftermath of this crash resulted in tens of billions of dollars in losses for investors, while several regulators sought founder and CEO Do Kwon.
Celsius, the betting and lending platform, is struggling to stay solvent if the recent suspension of payouts is any indication. Investment firm Three Arrows Capital was reportedly facing a $400 million liquidation and was unable to meet margin calls.
Despite the bleak near-term outlook for crypto, Cuban said that these downturns tend to have a cleansing effect on the market and that it will likely be the same for crypto this time around. But, he says, one should always support innovation:
“Disruptive applications and technologies that are released during a bear market, whether it’s stocks, cryptocurrencies, or any other business, will always find a market and thrive.”
Mark Lasri, CEO of Avenue Capital Group, is even more gloomy about the financial markets. Speaking on Bloomberg TV, he predicted that the troubles in the overall economy would continue through the end of 2022 as stock indices could fall another 10%. However, Lasry believes the US economy is strong enough to relatively mitigate the current downturn.
Lasri has been a cryptocurrency bull since 2018. In 2021, Cointelegraph reported that it lamented not having bought enough Bitcoin (BTC). But he told Bloomberg TV that BTC and Ether (ETH) are already down more than expected and that “no one knows where the bottom is for that.”
He added that even professional investors have a hard time spotting a bottom, “so invest when you can.”
Related: 72 of the top 100 coins down 90% or more: Here are the failed ones