The Crypto VC boss talks about Bitcoin’s prospects, the importance of Ethereum’s upgrade plans, and shares 7 altcoin projects he finds with a bright future.
“Crypto market has different dynamics from traditional markets”
Switzerland’s ‘Crypto Valley’ is one of the world’s most important regions for Blockchain technology and crypto assets. Most of the biggest projects in crypto operate in Crypto Valley, including Ethereum, Cardano, Polkadot, AAVE, Cosmos, Tezos, Dfinity.
Crypto Valley Venture Capital (CV VC) has traditionally focused on taking equity positions in crypto start-ups and offering ‘incubation’ services to finance new projects and get them off the ground. He holds positions in dozens of promising blockchain firms and crypto assets. It also offers investment products that allow clients to buy Bitcoin and top altcoin projects, and a recently launched ‘crypto fund’ called CV CB Digital Asset AMC. Olaf Hannemann, founder and CIO of CV VC, is optimistic about the long-term potential of the market:
In our investment thesis, we basically believe that Blockchain technology is a catalyst for many other megatrend technologies that are occurring right now, such as machine learning, internet of things, personalized health and longevity.
Hannemann sees the recent plunge in crypto-asset prices as an inevitable short-term pullback rather than the start of a long bear market:
I personally think it’s just a pullback but still, this crypto is a market where you only have 10 years of experience and know it’s very different. More and more established capital is also coming in. There are different market dynamics than traditional established markets. One thing that is both a challenge and an opportunity is that you can trade extremely high leverage positions. This will bring along a very volatile market in the short term.
What are their thoughts and expectations about the leading crypto and leading altcoin?
Turning specifically to Bitcoin, Hannemann predicts it will rise higher over time, in keeping with its stock-to-flow model, which predicts prices to rise over the long term as the supply of new cryptocurrencies dwindles:
Frankly, we believe fundamentally in all things crypto in the medium to long term, but I don’t know if we can round up and see $100,000 this year. There is clearly strong fundamental support at or slightly below these levels. If we get into the mid-thirties for a long time, that will worry me a lot, but I’m still basically positive about Bitcoin. I have great faith in the all stock-to-flow approach. That means it has to go much higher than where we are now.
Bitcoin fell below $40,000 on Friday for the first time since August and was swept away by a wave of risk aversion that took its toll on more expensive parts of the stock market, such as tech stocks. Apart from Bitcoin, Hannemann shows bullish for the leading altcoin Ethereum:
Another fundamental view we have is to support protocols where people actually develop projects. Our view of Ethereum is generally positive. It is still preferred for many projects and I think there is still a positive momentum. The interesting part will be the next two years in terms of where we really see the adoption and commercialization of projects and what other protocols projects choose to develop on.
Altcoin projects that the crypto boss sees bright future
According to the crypto boss, there is a lot of capital in Ethereum, but so are Tezos (XTZ) and Cardano (ADA). In addition, Hannemann states that they are interested in the following altcoin projects:
We also love Solana (SOL) and Polkadot (DOT). There are projects looking at the stacks that offer applications built on Bitcoin. Avalanche (AVAX) is also something to watch and we’ve been looking at Near Protocol (NEAR) lately
CV VC has partnered with Ethereum rival Cardano and open-source blockchain Tezos. Hannemann is very open-minded about which platforms will do best over time and isn’t convinced that it will be a winner-takes-all result. His advice to investors trying to support the right horses is to look where start-ups have built something:
Thinking long term, the jury is still undecided on whether there will be one or two endgame winning protocols or whether there will be many different altcoins for different industries. You come across evangelists who truly believe that one blockchain is better than the other, but you know what, I could have a better protocol, but if I can’t convince the newbies to improve my protocol, I’ll lose in the medium term.
Hannemann also notes that the upcoming release of Ethereum 2.0 will be something important to watch:
I think the combination of token price and improved efficiency on the Ethereum Blockchain will be critical for Blockchain startups and frankly the more the price goes up, the more efficient it needs to become or young startups may look elsewhere.