A bear market could be just the beginning of the pain for most cryptocurrencies, according to one widely followed industry expert.

Barry Silbert, CEO and founder of Digital Currency Group and Grayscale Investments, said besides bitcoin the majority of the once blazing hot crypto market will eventually be worthless.

"I'm not a believer in the vast majority of digital tokens and believe most will go to zero," Silbert told CNBC in a phone interview following a call with Grayscale investors.

The rise in initial coin offerings helped bring the industry's market capitalization to more than $800 billion at the start of last year, according to CoinMarketCap.com. Bitcoin made up roughly 50 percent of that total, with its price climbing to nearly $20,000 in December 2017. Amidst the buying mania, Initial coin offerings, or ICOs, became a popular way to raise money from eager retail investors. But they often touted a project that wasn't live yet, or in some cases turned out to be outright fraud.

"Almost every ICO was just an attempt to raise money but there was no use for the underlying token," Silbert said. "The vast majority of what's out there will be eliminated."

That elimination is already starting. The Securities and Exchange Commission cracked down on the fundraising method last year, and Chairman Jay Clayton repeatedly urged crypto founders to register with the agency. Silbert applauded the SEC's actions and said most of the tokens were illegal offerings.

Bitcoin's price, along with that of other other major cryptocurrencies, came crashing down last year. The world's first and best-known digital currency is down more than 80 percent since its peak and was trading near $3,572 as of Wednesday.

Still, Silbert said he is "as bullish as he has ever been" on bitcoin. As an early investor, he lived through multiple price plunges, all of which were followed by a full recovery. Despite bitcoin's relatively short 10-year existence, it's already on its third bear market plunge of 80 percent or more. The most recent one has yet to bounce back.

Although bitcoin has seen "a really ugly technical chart," Silbert said there's still a high degree of interest from institutional investors. Digital Currency Group has made the most active seed investments in the industry, more than three times the amount of Andreessen Horowitz, according to Pitchbook. The company owns and operates bitcoin brokerage firm Genesis Trading, and the largest digital currency asset management firm, Grayscale Investments.

Grayscale also started the first publicly traded bitcoin investment vehicle, the Grayscale Bitcoin Trust, which trades under the symbol GBTC on over the counter markets.

Part of the upside Silbert sees in bitcoin is based on its potential to replace gold as a safe haven asset.

"As far as I'm concerned bitcoin has won the race to be digital gold," Silbert said.

Younger investors don't view gold as the same non-correlated, safe haven as their parents, Silbert said. He quoted an Accenture statistic on the investor call, that $30 trillion of baby boomer wealth is going to be handed down in the next 20 years. Some of that is currently in gold, which Silbert is predicting a younger generation would convert to bitcoin as a hedge instead.

"I'm convinced that whatever money is in gold is not going to stay in gold," Silbert said. "That gets handed down to millennials -- I'm highly confident a lot of that will go into bitcoin."

He said the speculation use case has been proven for bitcoin as a "buy and hold strategy." But the question of when meaningful institutional money starts flowing in still remains. Silbert said that heading into 2019, the infrastructure for that to happen safely is finally in place. Fidelity's custody solution and other investment opportunities like a futures market from the Intercontinental Exchange, parent company of the New York Stock Exchange, are all set to go live early this year.

If and when sentiment changes, Silbert predicted bitcoin prices would "snap back hard."

"There are certainty institutional investors that have put money to work and many more are are considering it," Silbert said. "Until now they wanted to make sure they're not catching a falling knife."