Here’s why O’Leary believes the worst is yet to come.
- Since peaking in November 2021, the crypto market has lost over $2 trillion in value, or 60% of its peak.
- shark tank investor Kevin O’Leary thinks that despite the sale, there is more to come.
- According to O’Leary, “all out panic” is always a great buying opportunity and will be good for the industry in the long run.
The cryptocurrency market has lost over $2 trillion in value since it peaked in 2021. shark tank investor Kevin O’Leary, aka Mr. Wonderful, thinks the worst is yet to come. In a recent tweet, he says, “There is going to be total panic and massive volatility in the crypto markets ahead before the industry returns to stronger companies and clearer regulations.” Here’s what he means by that.
Crypto bankruptcies and thousands laid off
The crypto market hit $3 trillion in November 2021. Since then, the market has fallen over 60% to around $920 billion, its worst first half ever. The collapse of the crypto market has caused many crypto funds and platforms to go bankrupt. Thousands of people have been laid off. Coinbase last month laid off nearly a fifth of its workforce, or 1,180 employees. Gemini, Crypto.com, BlockFi, Bitpanda, and OpenSea have all reduced their workforces by 5-20%, with more expected to follow.
Crypto firms Celsius Network, Voyager Digital, and crypto fund Three Arrows Capital all filed for bankruptcy this month. Experts are even calling the collapse of the Celsius crypto lending platform a “Lehman Brothers moment” for the crypto industry. This refers to the bankruptcy of investment bank Lehman Brothers, considered the culmination of the 2008 financial crisis.
The bottom will be marked by total panic
O’Leary says that despite the huge losses, the worst is yet to come. He believes there will continue to be tremendous selling pressure. This will trigger “total panic” among investors, and weaker crypto companies run by “dumb managers” will be wiped out. O’Leary believes that only after a “real big event” will the crypto market bottom out and the industry begin to “come back to stronger companies and clearer regulations.”
O’Leary says this big event could be one of the big crypto players going bankrupt. He thinks it’s yet to come, and while he doesn’t know who it may be, “it’ll be because of leverage, some sort of relationship in a counterparty holding that they don’t have. not disclosed…”
He bases this on the track record of other investment asset classes. “I go back to other asset classes that I’ve invested in for decades. In all cases – traditional bonds, traditional equities, real estate, alternative asset classes – the bottoms are reached with an event, an event panic as I call it, and you can find it in all asset classes.”
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While in the short term the cryptocurrency market will be extremely volatile, in the long term it “would be very healthy for the market” if that happened. “Full panic in the streets” is “always a great buying opportunity”, and the industry will also become much stronger as a result.
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