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Mike Novogratz, Jim Breyer and Tim Draper are some of the many billionaire investors in the traditional financial market who remain optimistic about the long-term trend of cryptography.
How are these investors able to maintain their positive position with respect to the growth of the cryptocurrency sector following a decline of 85 per cent in the overall assessment?
These are cycles
For the most part, high profile individual investors are able to handle large losses in emerging asset classes and high risk assets such as cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) because they represent a small part of their wealth and portfolios.
As is the case in real estate and other traditional markets, wealthy investors have the ability to hold assets and assets even in the event of an unexpected market crash or a bear market.
However, normal retail investors and individual economic operators in need of liquidity to hedge operations and daily expenses have no choice but to sell most of the high-risk assets they hold in their portfolios.
In bear markets, retail traders often suffer a significant loss because they are not able to manage a fall of 80-90% of their value and are forced to liquidate their holdings. Billionate investors and large institutions, on the other hand, have the luxury of holding and supporting their portfolios.
Perhaps a more important factor that has a high net worth than individuals remain relatively positive in the long-term growth of the cryptocurrency market is the historical performance of Bitcoin.
Over the past nine years, Bitcoin has undergone five bubble-crash-build-rally cycles in which the dominant cryptocurrency has dropped about 85% on average and has recovered to a new record high.
Starting at $ 19,500, Bitcoin lost about 82 percent in value and 85 percent would be around $ 2,950.
On Wall Street, most of the high-profile investors who are currently involved in the cryptocurrency market have gone through many cycles like the bubble-crash-build-rally model of cryptocurrencies and, for a large portion of these investors, these cycles do not come from an atypical appearance.
This year has also shown to investors that cryptocurrencies as an asset class are not a trend, because both cryptocurrency activities and major financial institutions continue to build and strengthen the infrastructure that surrounds the asset class. activities, as demonstrated by the efforts of NYSE, Nasdaq and ICE.
Jim Breyer, a billionaire venture capitalist, added that the best computer scientists in the world are crowded into the blockchain space and that it would not be a smart move to target the sector:
"So many of the best computer scientists and deep research doctors, students and postdocs are working on blockchain because they have so much fundamental interest in what blockchain means, you do not want to bet against the best and brightest in the world."
The question is, when will you recover?
On average, it took 67 weeks for Bitcoin to recover in the last five major fixes and reach a new all-time high. 67 weeks from the time Bitcoin reached $ 19,500 it would be the 2nd quarter of 2018.
The past is not a guarantee of future performance of the cryptocurrency space, but provides a clue as to how the market normally behaves and survives through intense sales.
Jim Breyer Image of JD Lasica / Flickr
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