Thank you James
I read this as India trying to steer its citizens into its own cryptocurrency.
Scott,
Bitcoin initially surged to day high after the news but has fallen back below 38,500 now.
By the way, I switched out of XLK to BLOK at market opening today.
Not sure how long I will be holding BLOK.
Regards
James
Edit : Just took profit on BLOK at market close. I may buy back BLOK tomorrow depending on the update on my model in P123.
Bloomberg Markets
India Finally Warms to Crypto With Tax, Digital Currency
- Income from virtual assets to be taxed at 30%, minister says
- Plans to introduce digital rupee in fiscal year starting April
Thank you James.
These regulatory changes could come from any country at any time and when combined with the questionable utility of many of these cryptocurrencies there is a dimension of risk and unpredictability which is unique.
Jim/Scott,
It is pretty interesting that despite the crash in stocks yesterday, crypto was relatively unaffected.
Both stocks/bonds are falling right now after the Jan payroll report, crypto is up now with bitcoin rising almost 10%.
Regards
James
EDIT : Bitcoin futures just broke through resistance at 39,000
Thank you James. It’s truly uncorrelated.
Scott,
Bitcoin CME futures just broke through the 42,000 resistance.
As long as it stays above 41,000-42,000, the next resistance is at 45,000-46,000 level.
We can see whether the decoupling is occuring when the US equity market opens .
Regards
James
Jim/Scott,
S&P 500 and Nasdaq 100 drops 0.4 and 0.8% respectively while Bitcoin rise more than 8.5%.
We are seeing a temporarily decoupling for Bitcoin and the US equity market.
Regards
James
Thank you James
Or maybe it was a temporary coupling between Bitcoin and stocks:)
Bitcoins volatility seems to be due to a combination of the inability to value it and greed/fear
James,
The recent Bitcoin price jump occurred when the non commercial traders moved to net long positions for the first time ever as per the prior graphic
Scott,
Bitcoin CME futures just dropped through support at 43,000.
If it stays below 43,000, there is a good chance that it will test the support at 39,000-40,000 level next week.
Regards
James
Thank you James.
I’m just watching it from a distance. Cryptos are very volatile and don’t mean revert or trend well, return drivers are questionable, Crypto hedge funds overall have a .88 correlation to Bitcoin suggesting more beta and less alpha, and I don’t have confidence in it as an asset class similar to this paper (https://www.institutionalinvestor.com/article/b1wnwl7t74ywtw/JPMAM-s-Michael-Cembalest-Says-He-Won-t-Play-the-Sap-for-Crypto). However I do recognize it’s value in being non correlated to everything else
Scott
Scott,
I am also watching from a distance right now.
For bitcoin, I will consider buying the dip if it dropped to 20,000 level or if it rises about the weekly Parabolic SAR (breaking new ATH) at about 60,000.
Regards
James
James,
I posted the prior article because it shared my view that it’s hard to find the bottom of a crypto selloff because there’s “nothing there” as the senior JP Morgan Strategist states in this article. Based on the same theme the Strategist states that digital assets are in particular danger because they serve no purpose. “It’s still all fairy dust and very vulnerable to higher interest rates,” he said.
Scott
Scott,
Thanks for sharing the article.
However, it should be noted that JP Morgan’s prediction was completely different 3 months ago and forecasted bitcoin hitting 146,000 in the long term.
“Indeed, JPMorgan reckons that volatility is such a problem that bitcoin’s fair price is actually around $35,000 at the moment. Yet the bank said that the token’s volatility is currently falling and that a price of $73,000 looks reasonable for next year.”
Like forecasting S&P500, investment banks change their view very often depending on the market direction.
Here is the link.
Regards
James
Scott,
I have send you a spreadsheet that compares the performance of Medallion Fund/Berkshire Hathaway/S&P 500 for the past 30 years.
Pls check your email box when you have time.
Regards
James
Thank you James. Biden just announced that a crypto executive order is coming this week. Between increased regulation and crypto weakness during a period that should drive it’s prices upward (inflation & confiscation of assets) I’m growing more skeptical of it’s utility (I still have an open mind but the data is getting more negative)
Scott,
It seems that a lot of large hedge funds are starting to embrace crypto.
Regards
James
Hedge funds’ biggest names — from Cohen to Dalio to Griffin — are embracing crypto. Here’s where the most influential managers stand.
Hedge funds like multi-strategy giants Millennium and Point72 are getting into crypto.
- The space, which was once dismissed by top managers, has become more accepted.
- There are still major holdouts, including Ken Griffin’s Citadel.
- The hedge-fund world didn’t come running to cryptocurrencies.
While some smaller funds embraced bitcoin and other digital currencies early on, the biggest names in the industry needed to warm up to the idea of investing in a completely new asset class.
But now that some of the world’s most respected investors have embraced bitcoin, the floodgates have opened. A PwC report from last summer found that while only 21% of hedge funds are currently investing in digital assets, a quarter of those who are not have made plans to this year.
The macro guys — managers like Brevan Howard, Tudor Capital, and more — were first of the big names to jump on the train more than a year ago, and the large multi-strategy funds have followed suit. Steve Cohen’s Point72, Izzy Englander’s Millennium, and Dmitry Balyasny’s eponymous fund have all either hired people to trade crypto, invested in digital currencies through a trust, or are exploring the area broadly.
Citadel Securities founder Ken Griffin had previously lambasted the digital asset space, but has since changed his stance saying his market maker could soon get involved.
Here are what some of the biggest hedge fund managers are doing in the volatile space.
Citadel
Ken Griffin
Billionaire Ken Griffin slammed cryptocurrencies as a “jihadist call” against the dollar in October 2021. CNBC/ Heidi Gutman
Ken Griffin has softened his views on cryptocurrencies and Citadel could get into the digital asset space in the coming months.
“Crypto has been one of the great, great stories in finance over the course of roughly the last 15 years and, I’ll be clear, I’ve been in the naysayer camp over that 15-year period,” he recently told Bloomberg TV.
“But the crypto markets today have a market capitalization of about $2 trillion in round numbers, which tells you that I haven’t been right on this call over the last 15 years,” he said.
Griffin said while he still has doubts, he is interested in exploring the industry through Citadel Securities, the largest US market maker.
Citadel’s hedge fund has not been linked to any digital currency investments yet. In a CNBC interview in February, Griffin said he doesn’t understand the “economic underpinning of cryptocurrencies.”
As recently as October last year, he had criticized crypto cheerleaders by saying their efforts are a “jihadist call” against the dollar.
“What a crazy concept this is, that we as a country embrace so many bright, young, talented people to come up with a replacement for our reserve currency,” he had said at the Economic Club of Chicago.
Point72 Asset Management
Steve Cohen.
Steve Cohen is the founder of Point72 and the owner of the New York Mets. Point72; Shayanne Gal/Insider
Last year, billionaire Steve Cohen’s Point72 Asset Management is building up its crypto-trading capabilities, Cohen said at the SALT conference in September.
The billionaire New York Mets owner revealed at SALT that it was his son — a “cryptomanic” — who turned him onto crypto.
“Once I decided there were opportunities, and I thought this could be a space like the internet — it could be incredibly transformational — I wasn’t going to miss this,” he said.
He invested in crypto analytics firm Messari’s $21 million funding round in August through his firm’s venture arm, and his family office announced it was planning to invest in Radkl, a quant crypto manager.
Last year, Cohen told investors that Point72 was “exploring opportunities around blockchain technology and its transformative and disruptive capabilities.”
“We would be remiss to ignore a now $2 trillion cryptocurrency market,” he said in a letter, according to Bloomberg.
Balyasny Asset Management
Dmitry Balyasny
Dmitry Balyasny worked at Schonfeld before starting his own fund. Balyasny
Dmitry Balyasny’s eponymous firm is doing due diligence on portfolio managers who invest in cryptocurrencies, including bitcoin, but the firm’s hedge fund had not invested in the space as of April.
Millennium Management
izzy Israel Englander
Israel Englander, Millennium Management CEO. Phil McCarten/Reuters
Billionaire Izzy Englander’s Millennium has exposure to the crypto markets through a variety of instruments, including ETFs and trusts, such as Grayscale Investments.
Grayscale, which has pulled in hundreds of millions from hedge funds, operates 14 different trusts that invest in individual currencies including bitcoin, ethereum, litecoin, and more. The firm’s hedge fund is invested in some of Grayscale products, Millennium confirmed.
One of Englander’s hedge fund spin-offs, Modular Asset Management, tapped Daniel Liebau as its new chief investment officer for a strategy that will focus on sustainable blockchain technologies, Bloomberg reported in March.
Third Point Management
dan loeb
Daniel S. Loeb, founder of Third Point LLC. REUTERS/Steve Marcus
Dan Loeb, the billionaire founder of Third Point, hinted about his crypto exposure before it came out in regulatory filings.
When Coinbase’s media arm reported that Loeb is a client of Coinbase, Loeb tweeted that he was “outed as a #holdr.” His firm has also made an investment in eToro, a private trading exchange that allows crypto which will go public via a
SPAC
in a $10.4 billion deal. It’s unclear how much cryptocurrency Third Point holds.
Tudor Investment Corporation
Paul Tudor Jones
Paul Tudor Jones is a big fan of bitcoin. Kevin Mazur/Getty Images/Robin Hood
Paul Tudor Jones has been a bull for bitcoin since 2020.
The billionaire founder of Tudor Investment Corp. has likened investing in bitcoin to getting in early on a hot tech company.
His firm is also expanding its crypto trading capabilities as a bid to hedge against inflation, the Wall Street Journal reported in March.
He said in 2020 that he put 1 to 2% of his assets in bitcoin, and it was later revealed he used Coinbase and Bakkt as custodians.
“The best profit-maximizing strategy is to own the fastest horse. If I am forced to forecast, my bet is it will be bitcoin,” Jones said in the client note in 2020.
Brevan Howard
Alan Howard
Brevan Howard co-founder and billionaire Alan Howard has changed roles to focus more on trades. Ringo Chiu/ZumaPresses
Brevan Howard rolled out a cryptocurrency hedge fund in January.
The fund makes bets on the bitcoin, ether, and other cryptocurrency prices, looks for arbitrage opportunities between digital assets, and invests in blockchain technology, the Wall Street Journal recently reported.
The Brevan Howard is an investor in crypto investment firm Distributed Global, as well as One River Asset Management, which runs crypto funds of its own.
The firm launched a new unit in September, BH Digital, to manage digital assets and cryptocurrencies, Reuters reported. Colleen Sullivan, from digital trading firm CMT, was brought on to lead investments in the sector as well.
Alan Howard, the billionaire cofounder of Brevan Howard, had already been investing his personal wealth in digital currencies.
Bridgewater Associates
Dalio believes that holding 1 or 2% of your portfolio in digital assets is reasonable. Kimberly White/Getty Images
For everyone worried about inflation, Ray Dalio is recommending bitcoin, not bonds, as a hedge.
The billionaire founder of Bridgewater Associates said in an interview with CoinDesk last that he expects the US dollar to be devalued soon, pushing bitcoin higher. He revealed in this interview that he is personally invested in bitcoin, somewhat of a surprise as he was previously skeptical about the space.
At the start of 2021 though, Dalio started to change his tune, calling bitcoin “one hell of an invention” in a letter to investors. It’s not known how much crypto Dalio has, but he told attendees of SALT that he has more bitcoin than gold.
He also likened cryptocurrencies to “almost a younger generation’s alternative to gold,” he told MarketWatch in a December 2021 interview.
Tiger Global
Chase Coleman, the billionaire hedge fund manager behind Tiger Global.
Billionaire Chase Coleman has made private market bets on crypto-related companies. Business Insider/ Mike Nudelman
While Tiger Global is not investing in crypto through its hedge fund, the firm’s private investing arm is still exposed to the space.
Tiger Global led a $50 million funding round in February 2022 for the Philippine Digital Asset Exchange, as reported by Forbes.
Billionaire Chase Coleman’s manager was a leader in Babel Finance’s $40 million Series A alongside venture firms like Sequoia and Dragonfly Capital. The firm, which has offices in Singapore, Beijing, and Hong Kong, has gone from offering loans to crypto miners and traders to a more full-scale crypto lending business targeting institutional clients. It also has a suite of asset management products focused on digital currencies.
Tiger Global also partnered with fellow Tiger Cub Coatue Management to lead Bitso’s $250 million Series C, as the Mexican company became the first crypto unicorn in Latin America with a $2.2 billion valuation.
Bitso operates a cryptocurrency platform in Mexico, Argentina, and Brazil.
Coatue Management
Philippe Laffont coatue
Philippe Laffont, founder and portfolio manager of Coatue Management. Eduardo Munoz/ Reuters
Coatue’s investment into Bitso alongside Tiger Global came just five months after the Mexico City-based start-up raised its Series B.
The company has raised more than $300 million in total now, and Daniel Vogel, the cofounder and CEO of Bitso, said more than 2 million people use the platform, which only requires a minimum buy of 50 Mexican pesos, or roughly $2.50.
Coatue Management alongside Tiger Global also bought $100 million worth of tokens by Braintrust, which is a talent network built with blockchain, as reported by Reuters in December.
Man Group
Luke Ellis
Luke Ellis, CEO of Man Group, isn’t a long-term holder of crypto. Heidi Gutman via Getty Images
In 2017, Man Group CEO Luke Ellis told Reuters that his firm would add cryptocurrencies to its investment universe for the firm’s traders, but it seems Ellis isn’t sold on the long-term benefits pitched by bitcoin evangelists.
In a March interview with CNBC, Ellis said bitcoin is more of a trading instrument than a long-term asset allocation.