Dot-com billionaire Mark Cuban said that while a few cryptocurrencies like bitcoin and ether will survive and thrive to become the new Amazons and EBays, most digital assets will burst with a crypto bubble.
Considering the wreckage of the 2018 crypto bubble, that suggests that the crypto investor believes a mighty big shake-out is coming just as it did 20 years ago for the 2001 dot-com bubble.
“Watching the cryptos trade, it’s EXACTLY like the internet stock bubble, EXACTLY,” he tweeted on Jan. 11. “I think btc, eth, a few others will be analogous to those that were built during the dot-com era, survived the bubble bursting and thrived, like AMZN, EBay, and Priceline. Many won’t.”
Cuban, who made his billions by convincing Yahoo to buy his Broadcast.com stock market darling for $5.7 billion after it unicorned to $1 billion in a 1999 IPO based on $13.5 million in revenue. Pulling more than $1 billion out of the sale, he “lamboed” his way into the ownership of the NBA’s Dallas Mavericks basketball team.
“Along the way MANY fortunes will be made and LOST and we find out who has the stomach to HODL and who doesn’t,” Cuban added. “My advice? Learn how to hedge.”
Of course, one of the lessons of Cuban’s own actions during the dot-com bubble teaches is to know when to get out of a bubble. Cuban’s fortune from the Yahoo sale was paid in Yahoo stock, which he sold within a year.
“As during the dot-com bubble ‘the experts’ try to justify whatever the pricing of the day is,” he said, adding:
“Crypto, much like gold, is a supply and demand driven. All the narratives about [currency] debasement, fiat, etc are just sales pitches. The biggest sales pitch is scarcity vs demand. That’s it.”
And that’s only going to get worse. As Modern Consensus reported this morning, much of the bitcoin buying since December has been done by whales. Wallets with more than 1,000 BTC—about $30 million—are growing while the funds in small bitcoin holders’ wallets have been dropping.
Of course, Cuban’s comments drew a tart reply from leading Bitcoin skeptic Peter Schiff, who replied on Cuban’s Twitter thread. He said:
“The difference is that some of those early internet stocks actually had real value. So, they survived and ultimately thrived. None of the cryptos have any real value so there will be no winners. They will all lose.”