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This Hedge Fund Says its Crypto Investments Will Continue Despite Price Volatility

coingape.com 06 August 2021 21:54, UTC
Reading time: ~2 m

In a letter to investors, Daniel Loeb, the Founder and Chief Executive Officer of New York–based hedge fund, Third Point Management has reiterated his firm’s positive disposition to digital currencies. In the letter, Loeb noted the firm’s potentials to continually fund innovative crypto firms just as it did with the likes of CipherTrace, Bitwise, and FTX Derivatives Exchange.

Hedge funds have been geared up with investments in the digital currency ecosystem for the past year, helping to send the prices of cryptocurrencies like Bitcoin (BTC) to new highs. The direct or indirect entry of mainstream financial management firms like Third Point is particularly a good outlook for the crypto ecosystem, as it signifies the industry is attaining maturity.

The Drawback of Regulation

As the digital currency ecosystem evolved and transition to a trillion dollar industry, the attention and interest of regulators was revived. In what many in the cryptocurrency industry sees as a way to suppress the advances in the growing industry, the United States Securities and Exchange Commission (SEC) has remained adamant about approving a Bitcoin ETF product. This is unlike many advanced economies including Brazil, Germany, Canada, and Switzerland with such similar products.

Daniel Loeb however sees things differently, highlighting the disruptive tendencies of the technology.

“While crypto is popularly viewed as an alternative (and speculative) asset class, we are most intrigued by its potential to become a disruptive technology, impacting broad swaths of the economy. It has all the appealing characteristics of disruptive innovation: greater inclusion and access, a decentralized model providing unique transparency, (potentially) faster speeds with lower costs, and a sense of independence for users and developers,” he wrote in the letter.

Drawing on this note, the Billionaire investor whose fund holds over $17 billion in Assets Under Management (AUM) said the firm will continue to make strategic investment in the crypto ecosystem.

“We will continue to pursue more of these investments in the portfolio and see opportunities for several areas of our business,” Loeb said, not oblivious of the impact of volatility the industry brandishes. We have sized our exposure to the space to be commensurate with the significant risk of capital. Like many emerging asset classes, we anticipate extreme volatility in price and sentiment, but these concerns are dwarfed by the incredible disruptive potential offered by this technology.”

While Capitol hill looks for way to infuse crypto provisions into the bipartisan infrastructure bill that has caused division amongst lawmakers, the inherent uniqueness of this technology is notably being accepted by all.

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