Shark Tank investor Kevin O’Leary says he still sees cryptocurrencies as a viable investment class despite the recent selloffs that have shaken the markets.
In a new interview with Yahoo Finance Live, O’Leary compares Bitcoin (BTC) and Ethereum (ETH) investing to the early days of some of the world’s leading tech companies which experienced violent price movements before becoming industry leaders.
When asked what he thinks the biggest opportunity for investors is in 2022, the Shark Tank star says,
“The one that I really found interesting over the last 24 months has been crypto and blockchain technologies and tokens and NFTs [non-fungible tokens].
You have to make a binary decision about this stuff, and this is very difficult for many institutions… and many of them have not even started their journey into cryptocurrencies…
This is how I wrap my head around it and I think it would help investors to think this way. If you invest in Microsoft and Google and Amazon and so many of these other platforms, what is the core you’re investing in?
Google is software. Bitcoin is not a coin. It’s actually software. The blockchain is software…
So the real decision is if you’re willing to invest in software because it’s a productivity tool as an equity, such as Google, why wouldn’t you invest in software such as Ethereum? Because it provides a service… that is being used globally.”
O’Leary next lays out his strategy of how to wade through the muddle of investment options in the nascent digital asset space by sticking to allocated portions within his overall portfolio.
“The question is which coins, which tokens, which blockchains? And for that I apply the same rules of diversification I apply to my stocks and bonds.
No more than 5% in any one position. No more than 20% in the whole sector.
I’m not anywhere near 20% in crypto. I’ve just gone over 10.7% in our operating company.”
The macro investor says he will accept crypto’s extreme volatility and reminds people that Amazon often saw wild price swings before achieving market dominance.
“I have a plethora of positions. I’m going to make the decision there that this is even more volatile than technology equities, and it certainly is. Bitcoin is having one of its worst starts [to a year] ever.
But you have to get used to it, just like you have to get used to Amazon where it would have these 30% to 50% corrections. Same thing with Bitcoin.”
At time of writing Bitcoin is up slightly to $42,682, while number-two crypto asset Ethereum is up 4.67% to $3,236.
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