Mark Cuban, the owner of the Dallas Mavericks and a billionaire crypto investor, says the current market collapse reminds him of a Warren Buffett proverb.
The rise and collapse of crypto markets and initiatives, according to Cuban, are similar to the saying of the 91-year-old ‘Oracle of Omaha,’ “Only when the tide goes out do you learn who’s been swimming nude.”
Cuban made the statement during a June 16 conversation with Fortune, in which he explored what he considers to be faulty business strategies in some crypto companies that have struggled in recent months.
“You will see firms that were sustained by cheap, easy money—but didn’t have legitimate business prospects—disappear in stocks and crypto,” the Shark Tank investor predicted.
“When the tide goes out, you get to see who is swimming naked,” [Warren] Buffett remarks.
Terra, Celsius, and Three Arrows Capital were the corporations that appeared to be swimming naked.
By the middle of May, the Terra environment, now known as Terra Classic, had entirely collapsed. Investors have lost billions of dollars due to the collapse, and many regulatory organizations have launched a search for the company’s founder and CEO, Do Kwon.
If the recent halting of withdrawals is any indication, the Celsius staking and lending platform is struggling to stay afloat. Three Arrows Capital, an investment firm, is said to have faced a $400 million liquidation after failing to pay margin calls.
Need to support innovation in a bear market
Despite the bleak short-term picture for crypto, Cuban believes that downturns have a purifying impact on markets and that this time will be no different for crypto. However, he believes that you should constantly support innovation:
“Whether it’s stocks, crypto, or any other business, disruptive applications and technologies deployed during a bear market will always find a market and flourish.”
“Nobody knows what the bottom is.”
Marc Lasry, CEO of Avenue Capital Group, is even more pessimistic about the financial markets. On Bloomberg TV, he forecast that the suffering in the economy will last until the end of 2022, with equity indices falling another 10%. Lasry, on the other hand, feels that the US economy is robust enough to keep the current dip brief.
“You’re going to have more selling, more pain, and it will continue between now and the end of the year. But you can never time a bottom, so you want to get invested when you can.”
Since 2018, Lasry has been a crypto bull. He lamented that he hadn’t purchased enough BTC in 2021. However, he told Bloomberg TV that Bitcoin (BTC) & Ether (ETH) had already dropped more than predicted and that “nobody knows where the bottom is.”
“Nobody thought Bitcoin was going to go as low as it has, or Coinbase, people now are very nervous. Nobody knows what the bottom is for that.”
He went on to say that timing a bottom is difficult even for skilled investors, “so you want to get in when you can.”