Hedge funds hunt crypto despite warnings of possible crash

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If you’re looking for proof that cryptocurrencies are no longer just for underground traders, look no further than this year’s SALT conference.

The annual gathering of the Wall Street Titans hosted by SkyBridge Capital – whose founder is Trump’s short-lived communications chief Anthony “Mooch” Scaramucci – went crypto-mad as surprisingly large crowds flocked to the Javits Center in Midtown Manhattan earlier this week.

New York Mets owner Steve Cohen, founder of $ 22 billion New York hedge fund Point 72 Asset Management, told attendees he had finally seen the light on crypto, adding that he had been “Skeptical” until his son persuaded him to invest.

“I viewed crypto as speculative,” Cohen said at the conference. “My son convinced me to get involved in space. It could be a space like the Internet and I decided I wasn’t going to miss it.

Cohen is investing in a new cryptocurrency trading company called Radkl, the Wall Street Journal reported this week. Last month, Point 72 made its first crypto investment in data analytics provider Messari Inc.

“The hedge fund industry is mature today,” Cohen said. “You have to make a living – it doesn’t have the same enthusiasm and hope that technology and new industries have. “

Hedge fund titan Steve Cohen told SALT attendees that cryptocurrencies “could transform the financial system.” AP

Indeed, nearly a dozen of the more than 50 panels at the SkyBridge Alternatives conference focused on the trendy asset class. Sessions included “How Crypto Changes Everything” and “The Case of Macros for Bitcoin”.

“It was more crypto than people expected, but on the flip side, bitcoin has been the best asset class for the past five years,” said Randy Slifka of Slifka Asset Management. (Slifka says he held cryptos in the past, but doesn’t have any at the moment.)

Bitcoin has climbed more than 7,700% in the past five years against the US dollar, according to data from Coinbase, which operates a cryptocurrency exchange. The Dow Jones Industrial Average rose 92% over the same period.

Yet not all of the big names in finance were so optimistic about the new currency, which Warren Buffett, for his part, called “disgusting” and not a store of value.

Ray Dalio, founder of the $ 145 billion hedge fund Bridgewater Associates, warned at the conference against a crackdown on crypto. If crypto is “really successful,” he said, regulators will “kill” it. And for every Cathie Wood – the head of ARK Invest who predicted to SALT on Monday that Bitcoin would hit $ 500,000 from its current price of around $ 47,650, there is a notable bear.

Last month, hedge fund manager John Paulson, who made $ 20 billion predicting the US real estate market to fall in 2008, predicted cryptocurrencies would go down to zero.

Billionaire investor Ray Dalio said in a conference session: “I have more crypto than gold.” REUTERS

Still, Dalio said crypto is good for diversifying a portfolio and said he owns more crypto than gold.

Scaramucci also became a bitcoin evangelist. His book, “The Sweet Life with Bitcoin”, was distributed at the event. SkyBridge chief investment officer Ray Nolte revealed at the conference that 12% of the company’s $ 7 billion in holdings are in Bitcoin.

Meanwhile, major financial regulators have indicated they are looking to crack down on the space. In Senate testimony on Tuesday, Securities and Exchange Commission Chairman Gary Gensler said, “Sounds more like the Wild West or the old world of buyers, beware.” And in a speech at the Aspen Security Forum last month, Gensler declared fraud. ”

If we don’t fix the problems, I’m afraid a lot of people will be hurt, ”he said. Yet Gensler has yet to unveil specific proposals or even a timeline for when it will introduce possible rules.

Over the past year, Bitcoin has grown from around $ 10,000 in October to over $ 60,000 at some point in April. Last month, the price of Bitcoin fell below $ 30,000 but has since exceeded $ 47,000.

Other cryptocurrencies have seen even more dramatic peaks. Dogecoin, which is trading at around three cents, jumped 400% in a single week.

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