Luke Ellis, CEO of Man Group, the world’s largest listed hedge fund manager, said that cryptocurrencies have no inherent value. However, his company is still indulging in crypto trading because of their rapid price movements.
No Faith In Crypto; CEO Questions Digital Assets
In an interview with the Financial Times, CEO Luke Ellis discussed his company’s relationship and outlook on cryptocurrencies. In retrospect, his view highlights the issue with the current trading climate involving digital currency, where many active participants doubt the asset’s ultimate utility.
The Man Group, a London-based company, uses quantitative models to rake in profits, with crypto being just one of the several hundred markets that the firm operates in. The firm manages a total of $127 billion for clients, with around 15,000 stocks and thousands of credits.
Explaining his approach towards crypto trading, Ellis said,
"We like to be long and short depending on what the models say is likely to happen to the market and we will trade it long and short just as happily and in as big a size as market liquidity lets you trade.”
‘Crypto Is A Tulip Bulb’: Ellis
Tulip mania was the first recorded period of an asset bubble in history when the contract prices for some bulbs of the recently introduced and highly fashionable flower reached extraordinarily high levels and then dramatically collapsed within a short period.
CEO Ellis compared cryptocurrencies to this phenomenon at the center of the financial crisis in the Netherlands in the 17th century, saying,
“If you look at crypto as a whole, it’s a pure transactional instrument. There isn’t any inherent value in it. It’s a tulip bulb.”
Despite trading in cryptocurrencies, Ellis refuses to view them as asset management products. According to him, owning crypto does not deliver inherent value to the investors. He does believe in the potential of blockchain technology to increase payment efficiency. However, the fact that the tokens are ‘a tool of limited supply’ does not sit well with him.
Hedge Fund Heroes Are Coming To Crypto’s Rescue
Ellis might be one of the very few hedge fund managers still not 100% on board with cryptocurrencies. However, several other business tycoons and billionaires have already reversed their negative opinion of cryptocurrencies and voiced their support. Billionaire Carl Icahn is one such convert. Even though he used to be a crypto-skeptic, Icahn has now come around and is contemplating a potential $1.5 billion investment in digital currencies. Other such billionaire converts include Mark Cuban, Michael Saylor, and Howard Marks.
Billionaire investor Stanley Druckenmiller who is a strong proponent for Bitcoin and cryptocurrencies, in general, said,
"It's going to be very hard to unseat bitcoin, as a store of value asset, because it has a 14 year old brand, it's been around long enough, and obviously, there's a finite supply," Druckenmiller said.
Another hedge fund top dog who went from doubting Bitcoin to dabbling in it is Bridgewater Associates founder Ray Dalio, who declared that he prefers to hold Bitcoin rather than bonds as investment assets.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.