Some hedge fund managers are sceptical of cryptocurrencies, as Man Group CEO Luke Ellis compared them to tulip bulbs.
In an interview with the Financial Times, Ellis stated that the utility of cryptocurrency stems from its volatility, making it a viable trading option. The CEO of the world’s largest publicly traded hedge fund, according to him:
“If you look at cryptocurrencies as a whole, it is a pure trading instrument. There is no inherent worth in it whatsoever. It is a tulip bulb.”
Despite being an outdated comparison, crypto and Bitcoin (BTC) in particular are sometimes linked to the “Tulipmania” – a brief period in which the price of some tulip bulbs in the Netherlands surged dramatically before collapsing.
Given the tumultuous price movement of cryptocurrencies, Ellis noted that his $127 billion hedge fund is pleased to trade crypto since there is liquidity to back long or short positions.
The Man Group’s cryptocurrency involvement, according to Ellis, is not an endorsement of cryptocurrencies as an asset class.
The hedge fund does not offer crypto as an “asset management product,” according to the CEO of Man Group, but it is one of the approximately 800 marketplaces in which the organization trades.
Ellis mentioned inflation as a big reason why cryptocurrencies are becoming more popular inside asset portfolios while commenting on the current crypto investment thesis.
Indeed, Bitcoin proponents argue that BTC provides a buffer against inflation and monetary debasement, particularly in light of the present global economic recovery attempts in response to the COVID-19 pandemic.
As more hedge funds enter the crypto investing market, Ellis’ thoughts are timely. Hedge fund managers based in the United States plan to retain over 10% of their assets in cryptocurrency, according to Cointelegraph.
With bitcoin and the crypto market down more than 50% since May, big-money investors have identified it as an investment opportunity in anticipation of a return to parabolic price fluctuations before the end of the year.
