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The price of bitcoin (BTC-USD) has soared this year, briefly surpassing the $100,000 milestone as crypto investors became hopeful of friendlier regulation under the second Trump administration.
However, not all financial institutions and investors have fully bought in. In the past, bank executives, including JPMorgan CEO Jamie Dimon and Goldman Sachs CEO David Solomon, have alluded to crypto’s volatility and expressed skepticism about its use case beyond speculation, even as their banks roll out their own blockchain services.
In a recent episode of Financial Freestyle, Armando Pantoja, founder of the leading crypto site ICO Ranker, unpacked why banks and some financial executives are still wary of the cryptocurrency market — and argued why they shouldn’t be.
“You’ve got to remember crypto is a very immature market,” Pantoja said (see video above or listen below). “A lot of people compare crypto to the stock market and say, ‘Well, the stock market doesn’t have drawdowns like this.’ Well, the stock market is a mature market. Derivatives hold that market up.”
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Bitcoin and other cryptocurrencies have suffered significant market fluctuations, dropping as much as 85% in a single drawdown.
“Go back to the 1920s — the stock market was just as volatile as crypto,” Pantoja argued.
Pantoja, aka the Tall Guy Tycoon, has been a crypto investor for 13 years. He explained that, as with any new market, misinformation gets passed around, which makes uninformed investors nervous.
“The biggest thing people get wrong with cryptocurrency is [learning] from the wrong people,” Pantoja said.
He added that plenty of people start their crypto investments based on recommendations from friends or family members. “Then people say, ‘OK, well, I invested it,’ and … they don’t understand what they’re investing in,” Pantoja said. “So when the drawdown comes, they panic and get out.”
Even for those who are uncertain about blockchain and crypto’s volatility, Pantoja argued it’s the technology behind crypto that makes it a market worth investing in.
“Cryptocurrency is based on blockchain technology, and the technology of blockchain is what makes everything so secure,” he said. “Blockchain technology is a type of database that is the most secure database that’s ever been created. There’s almost no way possible to lose data.”
“Technology can’t be stopped — the government itself could not stop it,” he continued. “And when you understand that, everything starts to make sense. We’re not invested in bitcoin or the currency. We’re invested in that technology that underlies it.”