Fear Uncertainty and Doubt crashed the Bitcoin market one would say but ie Pantera $250M cryptocurrency fund has been exiting all holdings for 5 days when the market cap was $650B and the market cap is now $500 billion and so have all hedge fund managers: exiting their holdings as is required quarterly and annually if they are to earn their year end bonuses. We have seen this Market go up and down 20 to 30% the whole year dozens of times. It will bounce back again in as much as 24 hours as it has too many times before, they would opine.
What are hedge funds saying?
Each Year Agecroft Partners publishes our top 10 trends for the hedge fund industry the 1st week of January. Given what is happening today with the Bitcoin market we decided to release our views on the Cryptocurrency industry early. Please see below from Donald A. Steinbrugge, CFA Managing Partner Agecroft Partners, LLC
Investment strategies used by hedge funds have evolved over the years, although the biggest changes have come in the use of computers to develop portfolios. Rosetta Analytics is a woman-founded and woman-led CTA that's pioneering the use of artificial intelligence and deep reinforcement learning to build and manage alternative investment strategies for institutional and private Read More
Bullish on Cryptocurrency industry despite Bitcoin being one of the largest bubbles in capital markets history
The cryptocurrency market place is in its infancy stage and will go through tremendous innovation and evolution over the next decade. We expect the industry to experience exponential growth and at some point cryptocurrencies will be commonly used by consumers. It is estimated that there are currently over a thousand cryptocurrencies along with numerous service providers to the industry. Those individuals who can effectively evaluate the landscape, understand how the market place is evolving and determine who will be the future leaders in the industry will be highly successful.
It is important to differentiate between the future growth of the industry and the current valuation of its largest player: Bitcoin. We believe Bitcoin’s current price has been bid up by hype and speculation to potentially create the largest bubble in the financial market history. Unlike a bond that pays interest or an equity that generates earnings, the only thing supporting the value of bitcoin is supply and demand. Many investors are jumping in because of the meteoric rise in price which causes further price increases. Once the price peaks and begins to fall it might not be impossible to sell until the market bottoms, which could be cents on the dollar or less.
Other dangers to Bitcoin include increased competition from other cryptocurrencies, government regulation, and the potential loss of investor confidence from a major cyber-attack.