- Bitcoin has had some uneven weeks in the midst of rising exchange 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 is bullish on NFTs.
After trading in a tight range for several weeks, bitcoin (BTC) fell 7% on Thursday to land below $ 37,000.
With $ 36,000, bitcoin fell nearly 24% this year and fell about 48% from its record high of almost $ 69,000 in November.
Biggest cryptocurrency could not break higher and continued to go wild
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 remains in a very narrow trading area is because no one owns it,” he told Insider in an interview at the Crypto Bahamas conference. “I do not mean that ugly. I mean, it belongs to retail investors, high-
investors, some hedge funds and some special funds, but no government funds have indexed it. “
The lack of crypto-adoption of these state-owned investment funds means that there are no buyers supporting the market when cryptocurrencies fall. But that can change itself with a small sovereign mandate of 1%, which is held with that weighting forever once it is indexed, he explained.
“If you have a weighting of 1% and the price drops, you buy more to go back to 1%,” he said. “If it goes up, you sell up to 1%. It provides market stability, but we do not have that.”
Certainly, the pace of news of the growing institutional adoption of crypto is by no means smoke and mirrors. At the Crypto Bahamas conference, hosted by 30-year-old crypto-billionaire Sam Bankman-Fried and the think tank SALT, half of the audience were institutional investors or governments that owned no crypto, O ‘Leary noted.
“They are here because they see momentum and 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. create regulatory framework for crypto.
In addition to these bills, President Biden signed an executive order on cryptocurrencies in March, urging federal agencies to study the risks and benefits of digital assets, while encouraging the Federal Reserve to continue its assessment of a central bank’s digital currency. The order was interpreted positively by the crypto industry as a major step towards regulatory clarity in the United States.
“Now we know for sure that it will not be illegal, so it all happened within 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 its portfolio to any 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 as a sector and increased our weighting to 20%,” he said. “In a mandate like that, you can only have a weighting of 5% 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 in crypto companies, including FTX, Immutable Holdings, WonderFi and BitZero.
Its strategy is to own institutional quality infrastructure games that support crypto business and diversify their efforts across tokens, projects and companies. For example, its portfolio includes Layer 1 protocols solana (FLOOR), avalanche (AVAX), and hedera (HBAR) as well as a layer of two scaling solution polygon (MATIC), decentralized wireless network helium (HNT) and decentralized exchange serum (SRM).
“I have to diversify, that’s my primary motivation,” he said. “I do not need all of them to be successful, I need four to be successful. It’s like venture capital investments, you’re lucky to have 20% work, but when they work, they pay for all the mistakes you make. has committed. “
Link NFTs to physical assets
O’Leary, an avid watchmaker, is optimistic about how NFTs can disrupt and provide energy to the secondary market, specializing in advanced watch trading.
According to consulting firm McKinsey, the used watch market is expected to reach $ 29-32 billion in sales by 2025. The rapid growth and high value of the asset class has also attracted scammers.
“So many fake Rolexes are 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 calendar information, serial number and all other authentication information. In addition, they could receive a royalty every time the watch changes hands.
O’Leary focuses on the proliferation of NFTs through its stake in Immutable Holdings, which owns early companies including NFT.com, 1800Bitcoin.com and CBDC.com,
Eventually, he sees NFTs becoming the technology that supports and authenticates passports, property 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 knows for sure that it is approved,” he declared. . “It’s coming, and that’s what the NFT platform will be.”