Crypto markets need to hit ‘total panic’ before revival: Kevin O’Leary

Millionaire investor from the Shark Tank TV show Kevin O’Leary says there’s going to be “total panic” and “massive volatility” in the crypto markets ahead before the industry swings back toward stronger firms and clearer regulations.

Despite the recent fall of crypto finance firms including Voyager Digital and Celsius, O’Leary told Cointelegraph on July 13 that we’re still missing a “real big event” seen in previous market cycles before we go back to accelerated growth in the space, stating: 

“This passion play gets played out over and over again.”

Some investors have pointed to the current market conditions as a result of over-leveraged centralized finance firms such as Voyager and Celsius. O’Leary said the problems with firms like those come from “idiot managers” who needed to be weeded out to make the industry more viable.

“It’s unfortunate that these companies have gone to zero but you end up with much stronger species.”

Ben Samaroo, CEO of crypto investment support firm WonderFi Technologies who was also present during the interview with Cointelegraph said the recent bankruptcies are part of the “second wave of crypto crises” in Canada’s history.

Samaroo explained that the first “crypto crisis” in Canada was characterized by the fall of now-defunct crypto exchange QuadrigaCX in 2019, which saw $145 million in user funds go missing after the sudden death of its founder Gerry Cotten. 

The WonderFi CEO believes that this second wave of crypto crises will have regulators focusing on crypto earn products like those from Voyager Digital.

“Canadian regulators are looking at anyone in Canada offering earn products to figure out what it means. They’re looking through the rubble of the collapse to layer in restrictions.”

The duo suggested that stablecoin regulation will be another major hurdle facing the industry. O’Leary stated unequivocally that “we need more stablecoins, as many as there are commodities,” but that they must keep their peg.

Related: Celsius vows to return from bankruptcy but expert fears repeat of Mt Gox

Although he said that what happened with the destruction of the Terra ecosystem in May with the depegging of Terra USD (UST) was “good,” others cannot go down the same path if they wish to exist. He added that Tether (USDT) may experience more trouble after it wobbled on its peg and fell to $0.95 in May.

“Tether breaking peg is going to be a big problem for regulators as they look at what stables are acceptable for platforms for use.”

For now, USD Coin (USDC) is the preferred stablecoin on Bitbuy and Coinberry. However, Samaroo noted that the exchanges could list other stablecoins as long as it doesn’t subject users to a “catastrophic event from a stablecoin that isn’t all that stable.”

O’Leary and Samaroo appear to have their sights set on the long-term growth of the industry however, with WonderFi recently listing on the Toronto Stock Exchange on June 20 and completing a $38.4 million acquisition of Canadian crypto exchange Coinberry on July 4. It now owns Bitbuy and Coinberry in Canada.