Bloomberg

Crypto Hedge Funds Buy Bitcoin’s Balance Sheet Weekly Low

(Bloomberg) – Felix Dian is fighting the spirits after this week’s crypto collapse. Like many pros, the former Morgan Stanley trader says Bitcoin’s volatility actually shows why hedge funds are in the digital currency game: To ride boom and bust cycles with diversified bets so customers don’t get killed in times like this. His $ 80 million crypto-focused fund at MVPQ Capital is up 14% in May and its value has more than tripled this year. In contrast, Bitcoin has plunged nearly 30% this month, cutting the lead to 42% for 2021. “We had kept the powder dry,” he said in an interview in London. He took advantage of Wednesday’s price crash and bought Bitcoin as it traded around $ 35,000. Scores saw their fortunes vanish this week in a cascade of sales in the crypto markets. Investors spent some $ 410 billion to buy Bitcoin during this bull market, according to data from Chainalysis. When prices fell to $ 36,000 this week, $ 300 billion of those positions were at a loss, leaving fund managers wondering if the digital currency, which is under new regulatory scrutiny in states United and China, still has the makings of a serious asset. or nothing more than a speculative bubble will remain. Bitcoin hovered around $ 40,000 on Friday, up 1% as of 7:15 a.m. in New York. The token has lost 35% since hitting an all-time high of $ 63,000 in April. Charles Erith, who worked for 24 years in Asian emerging markets before switching to crypto, said speculative scum had been evacuated this week. He bought Bitcoin as prices fell. “At $ 35,000, we felt it was a reasonable level to add,” said Erith, who heads ByteTree Asset Management in London. “It’s obviously not regulated and he’s a very young asset, but I don’t think it will be a revisit of 2018.” Data from research firm Chainalysis shows professional investors used the crash as an opportunity to start buying low to help put a bottom under the market. Large investors bought 34,000 Bitcoin on Tuesday and Wednesday after reducing their holdings by 51,000 bitcoins in the past two weeks, according to data from Chainalysis. “People who borrowed money to invest were wiped out of the system,” said Kyle Davies, co-founder of Three Arrows Capital in Singapore. His company bought more Bitcoin and Ether as token prices fell this week. “Whenever we see a massive sell-off, it’s a chance to buy,” he added. “I wouldn’t be surprised if Bitcoin and Ethereum retrace the entire decline within a week.” In Paris, Loan Venkatapen, founder of Blocklabs Capital Management, blames the recent rout on over-leveraged retail investors, but says blockchain and associated technologies “are here to stay.” Unlike Davies, Venkatapen avoided Bitcoin, but bought Ether, Solana, and other assets linked to the decentralized finance movement when they were sold. “Bitcoin is not dying, but we expect productive blockchain assets like Ethereum or Solana to challenge Bitcoin’s dominance in the coming months,” he said.