Facing the Bear Market: Interview with Blocktrade Capital Founder Ben Marks
Ben Marks, founder and CEO of weighted crypto-asset index fund play Blocktrade Capital, has no shortage of thoughts when it comes to riding out the rollercoaster that’s been the fledgling cryptoeconomy. Marks was kind enough to talk with Bitsonline and tell us where he thought traders trip up, how 2018’s market crash is different from past crashes, and more.
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On Approaching the Crypto Market: a Chat with Blocktrade Capital’s Ben Marks
William Peaster, Bitsonline: We’ve seen a prolonged bearish downtrend in the crypto economy in Q1 and Q2 of 2018. In your view, what’s a big mistake traders’ make during these kinds of downturns?
Ben: The biggest mistake is being tempted to exit safer positions (BTC, ETH) and enter into riskier positions with low market cap coins. Traders should be confident that the market is going to increase soon, and when it does, the risky coins aren’t going to increase nearly as much as the safer top coins. That’s if the low market cap coins are even still around at all.
WP: You’ve been investing in bitcoin for 4 years now, so you’ve been around to see a few crashes. Is the current downtrend similar or different, in your opinion, from the what we’ve seen in the past?
Ben: In 2013, no one thought the prices were ever going to recover to the highs it experienced during the run-up caused by the success of Mt. Gox and BitInstant. Everyone assumed after the crash that prices would stay permanently in the $200 USD range, and that bitcoin would go back to just being used for darknet market activities. It’s not surprising that it took three years for the market to recover.
The bear market of 2018 is different in that everybody is anxiously waiting for prices to go up again. Confidence in the crypto markets hasn’t wavered, and that’s why I believe prices will recover much quicker than they did after the 2013 crash. Trader should confidently hold onto their positions, and not be tempted by riskier ICOs or low market cap positions.
WP: When it comes to crypto investments, you’ve brought up the idea of scrutinizing where projects are located in the world. How does this factor into your strategies, or how do you think it should factor into the everyday trader’s strategy? What would you be looking for regarding location?
Ben: For top 100 coins, it’s not very important where the project is based. But for newer projects like ICOs, location is of utmost importance. The regulatory landscape in the U.S. versus Asia is incredibly different. In the US, ICOs can’t mention the word “exchange,” nor can they talk about anything related to investment returns. This is obviously ironic since the single most important factor when evaluating an ICO is the timeline for when they plan on being listed on exchanges.
Asian ICOs don’t have to worry about any of this. They can freely talk about the exchange listings and the expected return on investment. For this reason, I don’t think that American ICOs have a great chance of succeeding in the future, unless they spend at least half their time marketing in Asia.
WP: As founder and CEO of Blocktrade Capital, what are the main opportunities and challenges in running a weighted index fund for crypto assets?
Ben: The biggest challenge revolves around the fact that nearly every single coin decreases in value during a bear market, and it’s nearly impossible to make money. You can’t really pitch investors on outperforming the market when Bitcoin was down 25 percent for the month, and your fund was down only 20 percent. Who would want to invest when your fund is down so much for the month? Raising investor capital in a bear market is nearly impossible.
Another challenge – but also an opportunity – revolves around ICOs. As a crypto fund manager, you get on average 2-3 ICO solicitations per day, through email, LinkedIn, cold calls, you name it. On one hand, you want to keep up with new projects and make sure you’re not missing out on that 100x return. On the other hand, you need to temper your emotions and not got overly excited by 100% bonuses and investment terms that are advantageous over what the general public is offered. The fact is that most ICOs never make it on to an exchange, and the ones that do post historically weak returns for investors. While it’s good for fund managers to keep up with the ICO market in general, it’s imperative that they keep tight grip on their wallet and aren’t easily swayed by flashy ICO pitches.
WP: You have banking experience, having previously worked with Bank of America and Wells Fargo. What are some of the starkest contrasts you’ve noticed between the traditional, status quo world of finance and the emerging crypto economy?
Ben: Crypto is more fast-paced and exciting. People are in it to make a lot of money in a short amount of time. Everyone’s in a rush, and people can be impatient. Banking is more of just going to work every day and doing your job. The pace is much more relaxed. People are in it for the long haul, and they’re not as rushed to make money quickly.
Having founded Blocktrade Capital and serving as the fund’s current CEO, Marks has currently directed the index toward eight of the cryptoverse’s market cap heavyweights.
However this list isn’t set in stone, as Blocktrade Capital’s “basket” can be shifted around on a monthly basis. The fund is available only to U.S. accredited investors, and minimum investments in it start at $25,000 with both bitcoin and ether being accepted for contributions.
It’s been a challenging time for crypto funds so far in 2018, to say the least. But if the cryptoeconomy is starting a long-term cycle as its proponents suggest, then the long road is just beginning. If true, many more challenges and opportunities await accordingly.
What’s your take? How will Q3 and Q4 go for the cryptoeconomy this year? Let us know what you think in the comments below.
Images via Blocktrade Capital, Pixabay
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