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The ICO market is dead, but that won’t hamper the inevitable growth of the cryptocurrency market, says Barry Silbert, the founder of crypto investment fund Digital Currency Group.

Silbert said the frenzy for initial coin offerings in 2017 fueled the meteoric spike in bitcoin prices, but now the ICO market has been decimated, resulting in the mass sell-off we’re seeing now.

“The ICO market is dead — over,” Silbert told CNBC on November 27 (video below). “You now have the lack of demand from ICOs. And you have all the sponsors of the ICOs who raised a bunch of bitcoin [and ether] that are now starting to sell that.”

Silbert: Tech Sector Slump Is Pressuring Crypto

Silbert said it’s not surprising that the cryptocurrency market is suffering right now because so is the tech sector.

He explained that two sectors move in tandem because there are pools of overlap between investments in tech stocks and the crypto asset class.

[youtube https://www.youtube.com/watch?v=Pqz7W_zq6lU?feature=oembed&w=500&h=281]

Silbert echoed the assessment of Fundstrat’s Tom Lee, who said the downturn in tech stocks is partially responsible for the slump in the crypto industry.

“As growth stocks, tech, and FAANG come under pressure, it’s going to hurt bitcoin,” Lee reasoned.

Despite the recent drop-off, Lee remains bullish, calling the bitcoin implosion an “awkward transition” that will pass. Accordingly, Lee stands by his exuberant $15,000 bitcoin price target for 2018, as CCN reported.

While crypto bears are running for the exits, Silbert isn’t frazzled by the market’s erratic fluctuations because those are inevitable growing pains that accompany any new phenomenon.

Silbert said you have to look back at past bubbles and corrections to gain perspective.

“We’re 5, 6, 7, times through this now,” he said. “The first couple of times you see your balance sheet drop by 80 percent, it’s kind of rough on the stomach. By the third or fourth time, you get used to it. Now we view this as a fantastic opportunity.”

Institutions Are Knocking On Crypto’s Door

Silbert said remarkable things are occurring below the surface that are not being reflected in the market’s mundane obsession with daily bitcoin price movements.

Institutional investors are starting to get involved in the space — and that’s a game-changing development that will transform the industry.

“What’s happening behind the scenes is companies are being built to create infrastructure to enable the on-boarding of a whole new category of investors, which I think is going to happen in 2019,” he said. “That’s the institutional investors. So behind the scenes, nobody has slowed down.”

As CCN reported, a landmark event occurred in October 2018, when Harvard, Dartmouth, MIT, Yale, and Stanford announced that their multi-billion-dollar university endowments had started investing in cryptocurrencies.

The move was widely viewed as an unmistakable signal of institutional confidence in crypto as investment vehicles.

While the universities’ respective allocations to crypto is reportedly small, keep in mind that the combined endowments of the six universities currently invested in crypto is a staggering $108 billion.

Consider this: Harvard’s endowment is $37 billion, so even a 1% allocation to crypto tops a whopping $370 million.

‘Miners Are Long-Term Investors’

When asked about escalating mining costs, Barry Silbert said bitcoin mining costs are not the proper benchmark with which to value the asset class.

“I don’t agree with the premise that bitcoin mining costs should be used as a good entry point,” Silbert said. “You have to separate the investment decision that a miner is making from the operating cost for them to mine the bitcoin.”

Silbert said cryptocurrency mining operations have a long-term focus; they’re not thinking about short-term gains.

“Miners are long-term investors,” he explained. “The mining businesses that have been created over the past five years have accumulated massive amounts of capital. They have the ability to continue mining at a loss [because they’re going long].”

As CCN reported, crypto mining firm Coinmint plans to invest up to $700 million to build the world’s largest bitcoin mining center in Upstate New York.

Coinmint has already invested $50 million so far to convert a 1,300-acre Alcoa aluminum smelting plant in Massena, New York.

The new crypto mining farm is projected to create 150 new jobs, and is expected to be fully operational by June 2019.

Coinmint signed a 10-year lease on the property, signaling its confidence that despite bitcoin’s recent slump, it believes crypto is here to stay.

Featured image from Shutterstock.

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