Experts are starting to see a growth in the number of investors and investment firms that have become comfortable with Bitcoin and Ethereum, despite their recent volatility.
In an interview with CNBC, experts including major Chinese bitcoin exchange BTCC CEO Bobby Lee and Dave Chapman, managing director of Hong Kong-based commodities and digital assets trading house Octagon Strategy, revealed that investors have become resilient toward the volatility of Bitcoin and Ethereum.
Getting into mainstream
"We're now sort of at ... a tipping point, where people are now considering bitcoin or ethereum or digital assets as more mainstream. A lot of the people that we service are actually very comfortable with having 1 percent of their net worth into bitcoin or ethereum."
The vast majority of investors in alternative cryptocurrencies and crypto assets are speculators. Marc Cuban for instance, the billionaire investor and owner of NBA's Dallas Mavericks, revealed that he has personally invested in Bitcoin and other cryptocurrencies to learn more about their technical intricacies and structures.
Cointelegraph reported that Billionaire hedge fund investor Mike Novogratz has also invested 10 percent of his life savings or net worth into cryptocurrencies.
Why they invest
Still, most investors truly believe that the technology behind cryptocurrencies and public blockchains including Bitcoin and Ethereum will someday render major trillion dollar industries irrelevant. Investors perceive Bitcoin as the alternative financial network to the global banking system and are predicting that bitcoin could replace key financial infrastructure providers in the near future.
Investors in Ethereum believe the decentralized network can create autonomous operations and applications run by smart contracts. Hence, despite the volatility of cryptocurrencies that often result in daily change in value in the range of 5 to 40 percent amidst market corrections, investors are comfortable allocating a portion of their net worth into cryptocurrencies.
Admittedly, Chapman explained that most investors have cashed into cryptocurrencies due to the fear of missing out. The technical intricacies of Bitcoin and other cryptocurrencies are difficult to properly understand, especially since the vast majority of the public has been exposed to centralized banking systems and financial networks for decades.
Still, Chapman expressed his optimism towards the growth of demand in cryptocurrencies and explained that the fear of missing out is converting traditionally skeptical investors.
“[To them], it's just a natural extension of all their diversification of their portfolio. There's no other asset class in the world that could've given you the historic performance of this sector ... the historic performance, which is obviously not representative of future earnings, ... does appeal to a lot of people We get a lot of people who are like 'You know what? I still don't believe in this experiment — I'm not really a believer, but I'm tired of sitting on the sidelines and missing out,” said Chapman.