Cryptocurrencies and Millennials

Cryptocurrencies and Millennials

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.

This week, Elana talks with Mario Clemens, Principal, Token Holdings.

What is your outlook for crypto?

From a long-term perspective, I am extremely bullish on crypto, as an asset class, given its current aggregate value of $131 billion as of today’s (ed. note: January 4) writing. Millennials happen to be the single largest generation in the United States who, by the year 2020, will control roughly $7 trillion. Given millennial investment behavior for higher risk tolerance, we will likely see a flow of that $7 trillion enter the crypto market. It’s my view that penetration of millennials will be the key driver of demand for crypto. We need to keep in mind that we’re dealing with a young technology that could grow orders of magnitude larger if it delivers on its promises.

My short term view, which could end up being completely wrong, is that we are in the process of finding a bottom in market prices on the large, liquid, cryptocurrencies. I would expect to see some positive price movement followed by large selling pressures over the next six months. I think we will find a bottom somewhere in 2019 and enter a new bull market thereafter. This next bull market phase could see values rapidly exceed previous all-time highs.

What is your outlook for the economy?

I think it’s important to look at this from a historical perspective first. Historically, the U.S. economy has grown at a great rate despite many short-term setbacks. Over the last hundred years the Dow went from 81 to 23,000. This was a time in which we had two world wars, a great depression, a presidential assassination and many other panics in between. The bottom line is it has paid to remain bullish on the U.S. economy. The United States has a system that tends to unleash human potential and overcome obstacles.

I will share my thoughts on what could happen in the near term. It’s possible that we see a combination of rising interest rates and speculative asset values correct to their intrinsic value. This could cause market enthusiasm to subside and cause a prolonged bear market in stocks. It’s possible we see the economy soften due to the trade war we are having with China and the uncertainty occurring between Europe and the U.K. A pessimist might predict we see businesses take a more cautious stance on investment and job creation which could also lead to a weaker economy in the near-term. Having said that, I am still very bullish on the American economy going forward over the next many decades. If we do end up experiencing a depression I’d be keeping my eye out for long-term buying opportunities.

What keeps you up at night?

I think black swan events are always in the back of one’s mind. If I really thought about it, the biggest thing that would keep me up at night might be some sort of terrorist attack or war involving the United States. From an investment perspective, however, I don’t think it’s useful to focus on those types of things when making long-term investments.