Hedge funders chasing crypto despite warnings of possible crash

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

The annual gathering of Wall Street titans organized by SkyBridge Capital — whose founder is Trump’s short-lived communications chief Anthony “Mooch” Scaramucci — went crypto-crazy as a surprisingly large crowd flocked to the Javits Center in Midtown Manhattan earlier this week.

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

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

Cohen is investing in a new cryptocurrency trading firm 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 business today is mature,” Cohen said. “You have to grind out a living -it doesn’t have the same excitement and hope that technology and new industries have.”

Steve Cohen
Hedge fund titan Steve Cohen told SALT conference attendees 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 buzzy asset class. Sessions included “How Crypto Changes Everything” and “The Macro Case for Bitcoin.”

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

Bitcoin has soared by more than 7,700 percent over the last five years vs. the US dollar, according to data from Coinbase, which operates a cryptocurrency exchange. The Dow Jones industrial average is up 92 percent over the same time period.

Still, not all big names in finance were so sanguine on the newfangled currency, which Warren Buffett, for one, has called “disgusting” and not a store of value.

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

Last month, hedge fund manager John Paulson who made $20 billion predicting the 2008 downfall of the US housing market predicted cryptocurrencies will “go to zero.”

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

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

Scaramucci has also become a bitcoin evangelist. His book, “The Sweet Life with Bitcoin,” was passed out at the event. SkyBridge Chief Investment Officer Ray Nolte revealed at the conference that 12 percent of the firm’s $7 billion in holdings are in Bitcoin.

Meanwhile, top financial regulators have indicated they are looking to crack down on the space. In a Senate testimony Tuesday, Securities and Exchange Commission Chairman Gary Gensler said: “It’s more like the Wild West or the old world of ‘buyer beware.’” And in a speech at the Aspen Security Forum last month, Gensler said crypto is “rife with fraud.”

“If we don’t address the issues, I worry a lot of people will get hurt,” he said. Still, Gensler has yet to unveil specific proposals or even a timeline for when he will introduce possible rules

Over the past year, Bitcoin has jumped from around $10,000 in October to more than $60,000 at one point in April. Last month, the price of Bitcoin dropped below $30,000 but has since climbed past $47,000.

Other cryptocurrencies have seen even more dramatic spikes. Dogecoin, which trades at around three cents, has surged as much as 400 percent in a single week.



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