No one could accuse billionaire tech entrepreneur and Dallas Mavericks owner Mark Cuban of being a hater when it comes to the cryptocurrency market or its underlying blockchain technology.
In fact, the investor and Shark Tank co-star is a pretty vocal crypto evangelist and has a stake in almost two dozen companies that are doing work in the digital currency and/or blockchain space.
The two most heavily traded digital tokens, Bitcoin and ethereum, saw modest gains over the last 24 hours but are still hovering near their lowest values in two years.
Bitcoin has dropped over 31% in the last week, trading around $20,507 per token Friday afternoon, according to CoinGecko, and has seen a precipitous plunge from its high of around $68,000 per token last November.
Ethereum, listed at just over $1,079 per token Friday, has slid almost 40% in value in the last week and is far below its peak valuation of nearly $4,900 per token in November 2021.
But when it comes to crypto’s precipitous decline since hitting record-high values late last year, Cuban sees the cycle as both unsurprising and even, perhaps, an appropriate and necessary Darwinian moment for the still-evolving world of digital currencies.
“In stocks and crypto, you will see companies that were sustained by cheap, easy money — but didn’t have valid business prospects — will disappear,” Cuban told Fortune. “Like [Warren] Buffett says, ‘When the tide goes out, you get to see who is swimming naked.’”
A recent run of valuation declines both in crypto and tech stock markets have been fueled by investors fleeing speculative ventures for safer fiscal harbors has pushed some struggling token efforts toward the precipice of erasure and leading cryptocurrency exchanges are making deep cuts to their employee rosters.
U.S. stock indexes have been battered by heavy sell-off activity, and particularly so following a rough one-two punch that included a dismal inflation report late last week and the Federal Reserve responding with a .75% increase to its benchmark interest rate on Wednesday, the biggest single bump since 1994. Bitcoin and other cryptocurrencies have tended to correlate with stocks and other risk assets. When those indexes fall, crypto drops as well.
“Since November 2021, sentiment has changed drastically given the Fed rate hikes and inflation management. We’re also potentially looking at a recession given the Fed may need to finally tackle the demand side to manage inflation,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC earlier this week.
“All this points to the market not completely having bottomed and unless the Fed is able to take a breather, we’re probably not going to see bullishness return.”
Still, Cuban sees opportunity amidst all the turmoil, even as the overall crypto market watches its net value evaporate, having lost nearly $2 trillion since last year’s peaks.
“Disruptive applications and technology released during a bear market, whether stocks or crypto or any business, will always find a market and succeed,” Cuban told Fortune. “If rates go up, it will struggle till it’s priced in. The exception, as with stocks, is for new, game-changing applications.”