The cryptocurrency market is seeing a flash of failed and struggling projects amid a rough downturn that has left investors fearful over what’s to come.
Looking ahead, billionaire Mark Cuban sees extinction.
“In stocks and crypto, you will see companies that were sustained by cheap, easy money—but didn’t have valid business prospects—will disappear,” the Shark Tank investor and Dallas Mavericks owner told Fortune. “Like [Warren] Buffett says, ‘When the tide goes out, you get to see who is swimming naked.’”
After the Terra ecosystem collapsed, with failed algorithmic stablecoin TerraUSD (UST) and cryptocurrency Luna (LUNC) becoming nearly worthless, there has been a ripple effect throughout the space. This week alone, Celsius Network, one of the largest cryptocurrency lending platforms, halted withdrawals and sparked fears of bankruptcy.
Despite the negative market sentiment, Cuban said he expects innovation to come out of the crypto market downturn as well.
“Disruptive applications and technology released during a bear market, whether stocks or crypto or any business, will always find a market and succeed”
He says that cryptocurrencies are related to the Nasdaq, which has proved especially true in recent months. Tech stocks and Bitcoin, for example, have moved in tandem lately. The correlation between the Nasdaq 100 and Bitcoin was recently near all-time highs.
“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 himself is an avid cryptocurrency investor and self-proclaimed Ethereum maximalist. He owns a few cryptocurrencies and non-fungible tokens (NFTs) and has invested in a few blockchain companies.
