Why Billionaire Investors Still Remain Positive on Long-Term Trend of Crypto
December 10 2018 - 6:53AM
ADVFN Crypto NewsWire
Mike Novogratz, Jim Breyer, and Tim Draper are some of many billionaire investors in
the traditional financial market who remain optimistic towards the
long-term trend of crypto.
How are these investors able to maintain their positive stance
in regards to the growth of the cryptocurrency sector following an
85 percent decline in valuation across the board?
It’s About Cycles
For the most part, high profile individual investors are able to
handle severe losses in emerging asset classes and high-risk assets
like cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) because they account for a small part
of their wealth and portfolios.
As is the same in real estate and other traditional markets,
wealthy investors have the ability to hold onto assets and
properties even during the event of an unexpected market crash or
the occurrence of a bear market.
But, normal retail investors and individual traders who need
quick cash to cover day-to-day operations and expenses have no
other option but to sell most of the high-risk assets they hold in
their portfolios.
In bear markets, retail traders often suffer a significant loss
because they are unable to handle an 80 to 90 percent drop in value
and are forced into a position to liquidate their holdings.
Billionaire investors and large-scale institutions, in contrast,
have the luxury to hold and sustain their portfolios.
Perhaps a bigger factor that has high net worth individuals
remaining relatively positive on the long-term growth of the
cryptocurrency market is the historical performance of
Bitcoin.
Throughout the past nine years, Bitcoin has suffered five
bubble-crash-build-rally cycles wherein the dominant cryptocurrency
dropped by about 85 percent on average and recovered to a new
all-time high.
From $19,500, Bitcoin has dropped about 82 percent in value and
the 85 percent point would be at around $2,950.
On Wall Street, most of the high
profile investors that are currently involved in the cryptocurrency
market have gone through many cycles like the
bubble-crash-build-rally pattern of cryptocurrencies, and for a big
portion of those investors, such cycles do not come across as
untypical.
This year has also demonstrated to investors that
cryptocurrencies as an asset class is not a fad because both
cryptocurrency-related businesses and major financial institutions
continue to build and strengthen the infrastructure surrounding the
asset class, as seen in the efforts of NYSE, Nasdaq, and ICE.
Jim Breyer, a billionaire venture capitalist, added that the world’s best
computer scientists are flocking to the blockchain space and it
would not be a smart move to bet against the industry:
“So many of the very best computer scientists and deep learning
Ph.D. students and postdocs are working on blockchain because they
have so much fundamental interest in what blockchain can mean. You
don’t want to bet against the best and brightest in the world.”
Question is, When Will it Recover?
On average, it has taken 67 weeks for Bitcoin to recover in its
past five major corrections and achieve a new all-time high. 67
weeks from the point in which Bitcoin achieved $19,500 would be the
2nd quarter of 2018.
The past is not a guarantee of the future performance of the
cryptocurrency space, but it provides a hint on how the market
normally performs and survives through intense sell-offs.
Source:
CCN
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