Why is Bitcoin Crashing? Kevin O’Leary Explains NFT’s Bullish Thesis

  • Bitcoin has had a bumpy few weeks amid rising rates, inflation, and geopolitical risks.
  • Kevin O’Leary attributes the volatility of $BTC to the lack of institutional ownership at the sovereign level.
  • The Shark Tank investor explains why he still has 20% of his portfolio invested in digital assets and why he’s bullish on NFTs.

After trading in a tight range for weeks, bitcoin (BTC) fell 7% on Thursday to land below $37,000.

At $36,000, bitcoin was down nearly 24% this year and was down about 48% from its all-time high of nearly $69,000 in November.

Biggest Cryptocurrency Failed to Break Higher and Continued to Go Wild


volatility

because there is a lack of institutional adoption at the sovereign level, according to Kevin O’Leary, venture capitalist, entrepreneur and star of the “Shark Tank” series.

“The reason bitcoin stays in a very narrow trading range is because no one owns it,” he told Insider in an interview at the Crypto Bahamas conference. “I don’t mean that facetiously. I mean it belongs to retail investors, high-


net value

investors, some hedge funds and some specialty funds, but no sovereign funds have indexed it.”

The lack of crypto adoption by these state-owned investment funds means that there are no buyers supporting the market when cryptocurrencies go down. But that could change even with a small 1% sovereign mandate, which is held at that weighting in perpetuity once indexed, he explained.

“If you have a 1% weighting and the price goes down, you buy more to go back up to 1%,” he said. “If it goes up, you sell up to 1%. It provides market stability, but we don’t have that.”

Certainly, the pace of news about the growing institutional adoption of crypto is by no means smoke and mirrors. At the Crypto Bahamas conference, co-hosted by 30-year-old cryptobillionaire Sam Bankman-Fried and think tank SALT, half of the audience were institutional investors or governments who didn’t own any crypto, O’ observed. Leary.

Kevin O'Leary with FTX's Sam Bankman-Fried

Kevin O’Leary caught up with FTX founder Sam Bankman-Fried on the sidelines of the Crypto Bahamas conference.

Vicky Ge Huang / Insider

“They’re here because they see the momentum and the politics starting to change,” he said, pointing to the trio of bills from U.S. Senators Pat Toomey, Bill Hagerty and Cynthia Lummis that are up for debate. bipartisan committees on Capitol Hill to create regulatory frameworks for crypto.

In addition to these bills, President Biden signed an executive order on cryptocurrencies in March, calling on federal agencies to study the risks and benefits of digital assets while encouraging the Federal Reserve to continue its assessment of a central bank digital currency. The order was interpreted positively by the crypto industry as a big step towards regulatory clarity in the United States.

“Now we know for sure that it won’t become illegal, so this all happened in the last four months,” he said. “It’s a turning point.”

Maximize and diversify crypto betting

As an institutional investor, O’Leary cannot allocate more than 20% of his portfolio to any one of the 11 S&P 500 sectors. His belief is such that he believes digital assets will become the 12th sector in the blue chip index.

“So we considered crypto to be a sector and increased our weighting to 20%,” he said. “In a mandate like that, you can only hold a 5% weighting in a single name. It is a classic institutional mandate.”

Today, O’Leary holds 32 positions in digital assets, which include tokens as well as shares of crypto companies including FTX, Immutable Holdings, WonderFi, and BitZero.

Its strategy is to own the institutional-grade infrastructure games that support crypto business and diversify its bets across tokens, projects, and companies. For example, its portfolio includes layer one protocols solana (FLOOR), avalanche (AVAX), and hedera (HBAR) as well as a layer two scaling solution polygon (MATIC), decentralized wireless network helium (HNT), and decentralized exchange serum (SRM).

“I have to diversify, that’s my main motivation,” he said. “I don’t need all of them to be successful, I need four to be successful. It’s like venture capital investing, you’re lucky to have 20% work, but when they work, they pay for all the mistakes you’ve made. “

Link NFTs to physical assets

An avid watch collector, O’Leary is optimistic about how NFTs could disrupt and energize the secondary market specializing in the high-end watch trade.

According to consulting firm McKinsey, the second-hand watch market is expected to reach $29 billion to $32 billion in sales by 2025. The rapid growth and high value of the asset class has also attracted fraudsters.

“There are so many fake Rolexes being made because the demand is so high,” he said. “It’s very difficult to tell the difference.”

According to him, this problem could be solved if the watchmakers simultaneously issued an NFT containing all the calendar information, the serial number and all the other authentication information. Additionally, they could receive a royalty each time the watch changes hands.

O’Leary is betting on the proliferation of NFTs through his stake in Immutable Holdings, which owns early-stage companies including NFT.com, 1800Bitcoin.com and CBDC.com,

Eventually, he sees NFTs becoming the technology that underpins and authenticates passports, real estate deeds, conference tickets and driver’s licenses.

“Why do I have to carry a card that I can lose when I could have an NFT attached to my mobile device, and just show the police officer my driver’s license, and he’ll know for sure it’s authenticated” , did he declare. . “It’s coming and that’s what the NFT platform will be.”

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Why is Bitcoin Crashing? Kevin O’Leary Explains NFT’s Bullish Thesis


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