Over the last decade, the cryptocurrency market has become increasingly diversified and gained more legitimacy, as some of the world's most renowned billionaires view them as valuable assets to hold in portfolios. Although these financial titans have varying reasons for their vindication, they all share one common understanding: Cryptocurrencies, such as Bitcoin (BTC +0.34%), Ethereum (ETH +1.94%), and Polygon (MATIC +0.00%), are leading the way as adoption of the asset class increases.
Ethereum
Neil Patel (Ethereum): The founder of the world's largest hedge-fund firm, Ray Dalio is widely regarded as an expert on anything related to macroeconomics and the markets at large. And he has never hesitated to share his views with the general public, whether it's via books or blog posts.
In fact, one of Dalio's most popular comments recently, saying that "cash is still trash," supports his reasoning for owning Bitcoin as a hedge against the depreciating value of the dollar. But this isn't the only cryptocurrency he owns. In December 2021, Dalio mentioned that he owns some Ethereum, as well.
Why would Ray Dalio, a macro expert and Bitcoin supporter, also be interested in holding ether? First of all, Dalio is a huge proponent of portfolio diversification, so not putting his entire crypto allocation into Bitcoin could simply be a way to reduce overall risk and gain exposure to the world's second-most-popular digital asset.
CRYPTO: ETH
Key Data Points
Furthermore, I think Dalio is starting to become more familiar with Ethereum's massive potential. Ethereum's smart-contract functionality and large developer ecosystem are hoping to upend a wide range of industries, the most notable being financial services. This is a sector dominated by intermediaries that Ethereum hopes to eliminate. Plus, the completed Merge, which converted Ethereum's blockchain to a proof-of-stake model, paves the way for the network to scale more quickly in order to handle more transactions and lower fees.
Because his perspectives are watched incredibly closely by the smartest and most important investors, it might be a good idea to follow in Ray Dalio's footsteps and consider buying Ethereum, if you haven't already. Cryptocurrencies are an extremely nascent asset class, so the possible upside is still huge. But because the risk remains undeniably high, it's best to allocate only a small percentage of your portfolio to ether.
Bitcoin
Michael Byrne (Bitcoin): Paul Tudor Jones is the legendary investor at the helm of Tudor Investment Corporation and currently has a net worth of nearly $7.5 billion. He began trading cotton futures in the commodity market in 1976 and has led Tudor Investment Corporation since 1980, so he has seen it all across a variety of bull and bear markets.
He's well-known for predicting the stock market crash of 1987. Jones also had the foresight to be open-minded about Bitcoin, becoming one of the first major figures from the traditional asset management world to come out in favor of it.
Jones looks at Bitcoin as a unique asset. He views it as an inflation hedge, with the added bonus that it's attracting some of the world's best and brightest minds to work on it. Jones feels that the level of intellectual talent coming into the crypto industry is a good reason to own Bitcoin.
He says that, "What I learned was that Bitcoin has this enormous contingent of really smart and sophisticated people who believe in it... You have this group of people crowdsourced from all over the world that are dedicated to seeing Bitcoin succeed and becoming a commonplace store of value." Jones sees this community almost as a call option on Bitcoin's store of value status, opining that, "I've never seen an inflation hedge where you also have the kicker that you also have great intellectual capital behind it."
CRYPTO: BTC
Key Data Points
The legendary investor confirms that his portfolio has a "small, single-digit" exposure to Bitcoin, but for a multibillion dollar fund, that is a considerable sum of money.
Jones is one of the most storied investors of the last few decades. I think that his approach here makes a lot of sense for investors of all experience levels, which is to look at Bitcoin as a hedge against further devaluation of global currencies, but one with the added bonus of a lot of smart people working on it. Likewise, I think that his allocation of a small, single-digit percentage of his overall portfolio makes sense for all investors.
Polygon
RJ Fulton (Polygon): Mark Cuban built a reputation over nearly the last four decades as being one of the most prolific tech investors of our time. Since his first investments in the industry during the internet boom of the 1990s, he's amassed a fortune of more than $4.5 billion. Being no stranger to up and coming technologies, Cuban is a fan of cryptocurrencies.
He has a diversified portfolio in the industry, which includes both companies offering blockchain-based products, such as the non-fungible token (NFT) marketplace OpenSea, and also cryptocurrencies themselves. Cuban owns a handful of the more popular cryptocurrencies like Bitcoin and Ethereum, but one that might come as a surprise is the increasingly popular layer 2 blockchain, Polygon.
Polygon is unique because instead of trying to create an alternative to Ethereum, it offers a scaling solution to help the blockchain work more efficiently. Polygon processes Ethereum transactions off of the main blockchain and then adds them at a later date. This lowers fees, increases speeds, but most importantly maintains compatibility with Ethereum.
CRYPTO: MATIC
Key Data Points
Back in May 2021, rather than just owning the cryptocurrency, Cuban invested in the blockchain directly. Although it's not known how large of a stake he has, the crypto enthusiast is well aware of Polygon's future potential.
Cuban's website describes Polygon as the "first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development." And Cuban himself said, "I was a Polygon user and find myself using it more and more."
Cuban isn't the only one taking notice of Polygon. Just this year, Meta (META +2.06%), Coca-Cola (KO +0.76%), and even Disney (DIS +1.93%) have all partnered with Polygon for various reasons. Since Cuban's initial investment in May 2021, Polygon's price has been reduced by more than half and is down almost 75% from its all-time high in November. Yet even with the decline, Polygon's achievements this year are making Cuban once again look like a savant.
Like many other cryptocurrencies, Polygon's price has taken a beating this year. Rather than seeing that as a reason to sell, investors should keep the big picture in focus and invest for the long term, just like Cuban has. When considering Polygon's lengthy list of achievements made this year and its future potential, now could be a great time to add some MATIC to your portfolio.
