- Kevin O’Leary compared the volatility in the cryptocurrency markets to the early days of Big Tech in an interview this week.
- The billionaire investor compared Bitcoin to Amazon directly in terms of price volatility, which he sees as an opportunity.
- Bitcoin is off to a bad start, but investors will have to get used to it, as is the case with Amazon, he told Yahoo Finance.
“Shark Tank” investor Kevin O’Leary has compared the high volatility of the cryptocurrency markets to the early days of the biggest tech companies, which underwent similar volatility in the early days of the dot-com boom before becoming a market leader.
In an interview with Yahoo Finance Live earlier this week, the Canadian billionaire described cryptocurrency as the biggest opportunity for investors in 2022, with volatility expected. He also indicated that the current sell-off in technology stocks was a potential buying opportunity.
He said, “When you get volatility, in general, in my world, I take advantage of it. Because I have to spread capital all the time, and I have to decide: Where am I going to put it?”
“I love growth, and I understand it’s going to be choppy. On days like this, I remind myself I’ve seen this movie before.”
O’Leary noted the rough start of tech stocks to 2022 and how that shaped against past performance.
In the interview, he said, “Go back 17 years to Amazon, which I’ve owned for almost this entire stretch. We’ve had 30, 40%, 50% patches every year. However, look where you end up today.”
“And so I look at it and say to myself: Let’s learn from the past, apply that to the future, and take advantage of the ups and downs.”
Amazon has endured great ups and downs during the internet boom and bust. The value of its shares went from less than $8 in mid-1998 to around $100 in six months, before peaking at $110 a year later and then crashing back to less than $10 by early 2001. It is now worth more than $3,000, And Amazon is one of the world’s most valuable companies.
“Bitcoin had one of its worst starts ever. But you have to get used to it, just like you had to get used to Amazon, where it will have these 30% to 50% retracements, the same with Bitcoin,” O’Leary said.
Bitcoin has seen sharp volatility over the past year, rising to over $64,000 in early 2021, before falling back below $30,000 in the middle of the year, and then climbing to a record high of nearly $69,000 by November. It has since fallen almost uninterruptedly, and by Thursday it was around $43,750.
Drawing the comparison between Amazon and bitcoin, O’Leary said that investing in Big Tech and cryptocurrency is basically the same as investing in software.
Referring to cryptocurrencies used in decentralized finance, he said, “Bitcoin is not a currency, it is actually software. Blockchain is software, Ethereum is software, HBAR is software, and Polygon is software.”
“So the real decision is whether you want to invest in software – because it is a productivity tool, like equity like Google – why not invest in software like ethereum? Because it provides a service, especially in payment systems that are used globally.”
O’Leary – aka “Mr. Wonderful” – also talked about the potential for more cryptographic regulation and the benefits it could bring. “If we make it regulated, if we bring the institutions into it and find a way to make it compliant, there are trillions of dollars that are going to come into this space, because it has a practical use,” he said.
The billionaire investor said he uses the same diversification rules for cryptocurrencies that he applies to stocks and bonds. Although he has not disclosed all of his holdings, he is known to hold bitcoin, ethereum, and US dollar stablecoins.
He notes that it is “not close to 20% in cryptocurrency” and has just topped 10.7% in its operating company.