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Steven Cohen Becomes the Latest Billionaire to Invest in a Cryptocurrency Hedge Fund

Billionaire Steven Cohen is the newest big-money addition to the rank of cryptocurrency investors. Affectionately dubbed the hedge fund king, Cohen joins the likes of Alan Howard and Mike Novogratz in making a bet that crypto investments will come good. The market has experienced a massive decline in fortunes since the start of the year.

Cohen Buys into Autonomous Partners’ Cryptocurrency Hedge Fund

According to Fortune, Cohen Private Ventures, an investment arm of the Cohen family office has invested in the Arianna Simpson-led Autonomous Partners. The firm, established in December 2017, is a hedge fund focused on cryptocurrency and blockchain startups. The fund already has a stellar cast of backers including Craft Ventures, Union Square Ventures, and Brian Armstrong (Coinbase CEO).

The details of the investment haven’t been made public yet, and Cohen Private Ventures haven’t made any comments yet. Speaking to Fortune on Thursday (July 12, 2018), Simpson said:

I’ve only brought on partners that I think can be very much value-add beyond their capital.

This isn’t the first time that Cohen and Simpson would be involved in the same venture. Back in 2015, Cohen Private Ventures also invested in Crystal Towers Capital, a fund run by Simpson.

Autonomous Partners also looks at the long-term potential of cryptos and blockchain companies based on the regulatory uncertainty that pervades the industry. The fund also holds investments in large-cap cryptos like Bitcoin and Ethereum. However, Simpson favors a more futuristic outlook, saying that investors have no trouble putting up equity in the likes of BTC and ETH.

Staying Away From XRP

XRP, the third-ranked cryptocurrency based on market capitalization is the significant absentee from the firm’s crypto investment portfolio. However, concerns over whether it is a security or not have led Simpson to steer the firm away from the token. Commenting on the matter, Simpson said:

I have a lot of concerns about the level of centralization there, and I have regulatory concerns if what they have issued is a security.

Ripple CEO Brad Garlinghouse and other executives at the company have consistently declared that XRP is not a security. The SEC has so far not given any indication as to its stance on the matter. The Commission has however stated that both Bitcoin and Ethereum are not securities.

What do you think about Cohen’s investment in cryptocurrency? Is the fund right to not consider XRP as a viable crypto investment? Keep the conversation going in the comment section below.

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Bitcoin Price Rally Might be Temporary

While BTC permabulls are no doubt happy to see Bitcoin prices recover from a slight dip, one expert believes the increase is only temporary. Spencer Bogart is of the opinion that a coming forced selling will most likely cause prices to decline even further.

Forced Selling by Crypto Hedge Funds May Drive Prices Lower

Spencer Bogart. Credit medium.com/@Bitcom21

Speaking to CNBC, yesterday (June 25, 2018), Bogart said that though he was “super bullish” on cryptocurrency at the moment, another significant price dip was imminent. According to Bogart, many of the cryptocurrency hedge funds established in 2017 are nearing their “one-year lock up.” Bogart argues that with the market declining by more than 50 percent since the start of the year, many liquid providers will be looking to sell. Liquid providers act as intermediaries between brokers and virtual currency exchange platforms. He went on to say:

They’re saying, ‘hey, I want to redeem out of that fund. That means forced selling on behalf of all of these new crypto funds that have popped up. I think that could take prices artificially lower.

2017 saw a massive spike in the number of cryptocurrency hedge funds. Spurred on by the meteoric rise in the price of many major crypto species, these funds have declined somewhat during the “cryptocurrency winter” of 2018. According to Bogart, many fund investors will be looking to count their losses by making forced sales of their holdings. Massive BTC selloffs usually result in significant price drops.

Bogart also had some useful advice for people looking to enter the market, saying:

Most people that are going to wait for lower prices will end up paying higher prices than they are today. So, I think the right move is not to try and time the market and try and average into it.

Spencer Bogart is a partner at San Francisco-based VC firm, Blockchain Capital. The firm focuses on supporting cryptocurrency/blockchain technology startups.

Bitcoin Has Bottomed

Brian Kelly / Courtesy: CNBC

In a related development, Brian Kelly of BKCM LLC believes that Bitcoin may have reached a new bottom. Speaking also to CNBC, Kelly referred to the previous BTC price dip that saw the top-ranked crypto slip below $6,000 on June 25. According to Kelly:

We saw bitcoin hit new lows; I think we went to $5,779. And then within about 10 or 15 minutes, you had a huge ramp up, hundred, two hundred points, and that’s typically the action that bitcoin has shown at bottoms.

Kelly also revealed that the present BTC mining cost was somewhere in the $5,900 region. Thus, miners are incentivized to keep prices above that level or risk incurring significant losses.

The BKCM chief went on reveal that it was still early days as far as knowing the future BTC price trajectory. He, however, noted positive signs such as increasing demand from Asia as well as the latest $250 million worth Tether that was printed on June 26, 2018.

Do you think the scheduled selling by crypto hedge funds will cause BTC prices to tank? What are your opinions on Kelly’s Bitcoin bottom analysis? Keep the conversation going in the comment section below.

Image courtesy of Ethereum World News archives and CoinMarketCap.

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Bitcoin Performed Better than Cryptocurrency Hedge Funds, Says Pantera CEO

It seems the cryptocurrency hedge fund honeymoon is over. After a stellar 2017, revenue appears to have dwindled significantly. Recent reports indicate that the losing trend of these firms continued through May 2018.

Pantera Down by 26 Percent and Crypto Prices Continue to Decline

According to Dan Morehead, Bitcoin, the number one cryptocurrency, performed better than his hedge fund in May 2018. Morehead is the Chief Executive Officer of Pantera Capital, a cryptocurrency hedge fund company.

In a letter to the fund’s investors on June 19, Morehead said, Pantera declined by 26 percent in May. This dip is in contrast to the April surge that was about 50 percent. In total, the Pantera CEO said that the fund is down by 51 percent since the start of 2018. When compared with BTC, it appears the cryptocurrency fared significantly better. BTC prices dropped by only 15 percent in May 2018.

Diversified Cryptocurrency Investment Portfolio Turning out to be a Problem

Having a diversified portfolio is an age-old investment advice. The logic is that by holding stakes in different assets, a trader can hedge losses in one asset with the gains in other assets. It is supposed to be a safe investment strategy. However, based on the situation with Pantera, portfolio diversification might not be such a good idea.

In the letter to investors, Morehead said the poor performance of Dash, Waves, OmiseGo, and Bitshares were mostly responsible for the decline in the fund’s revenue. Dash has been in free-fall since the start of 2018 and is among one of the worst performing cryptocurrencies in the market. Dash prices slumped by more than 30 percent in May.

Waves is another digital currency that performed poorly, dropping 85 percent of its value in May 2018. Like Dash, Waves has declined significantly throughout 2018 so far. At the start of the year, the 40th-ranked cryptocurrency according to CoinMarketCap was trading at above the $12 mark. By the end of May 2018, prices had slumped to below $5. OmiseGo and Bitshares dipped by 34 percent and 46 percent respectively during the same period.

Pantera Calls Out Warren Buffet

The firm also criticised Warren Buffett for his negative stance of cryptocurrencies saying:

Buffett avoided the dot-coms, but he also missed Amazon, Facebook, Google Netflix, et al. If Berkshire buys Bitcoin as quickly as Apple — it will be in 2045. Buckle in.

Buffett has on several occasions, expressed his dislike of Bitcoin and the cryptocurrency market in general. The Oracle of Omaha has called the industry “rat poisoned,” and “a bubble.” Despite his successes in the financial market, the Berkshire Hathaway chief hasn’t always called it right, missing out entirely on many plum stocks and being to the party as far as investing in others was concerned.

Do you think it is wise to diversify your cryptocurrency investment portfolio? Keep the conversation going in the comment section below.

Images courtesy of Pantera Capital and CoinMarketCap.

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‘American Universities Are Investing In Bitcoin (BTC),’ says Crypto Lawyer

According to Crypto lawyer, John Lore, some universities in the East Coast of the United States have started investing in Bitcoin (BTC). Due to the confidentiality of the information, Lore could not fully disclose which Universities were doing so. The investments are small and into the various cryptocurrency hedge funds available.

John Lore, the founder of Capital Fund Law Group, told Business Insider the following with respect to Universities showing an interest in Crypto investing:

We’re seeing some academic institutions getting involved on a limited basis for strategic reasons.

I can’t say the names of [the academic institutions] because that’s attorney-client but we have people mostly on the East Coast that have begun doing investments in this space on a fairly modest basis…

We see academia as a tie between these somewhat young and enthusiastic fund managers and capital raising.

His Law group specializes in providing legal services to the hedge fund industry and has advised approximately 30 crypto based hedge funds in the last year or so. According to Lore, the new hedge funds get a majority of their investments from high net individuals. The investments are of limited value and magnitude. This might be because the crypto-markets have proven to being volatile for the past few months. Lore added that:

Yes there are investors but at this point, investors are putting in very small percentages of their net worth as we would expect and as I believe is appropriate.

Institutional investors and high net individuals have been showing cautious interest towards investing in cryptocurrencies and blockchain technologies for both are new industries with little or no regulation. The decentralized aspect of the whole crypto-verse might be the reason for their reluctance to jump on board. Also, perhaps being accustomed to ‘business as usual’ of investing has left them with doubts about crypto and blockchain. New technology is usually treated with caution as was the case with the internet back in the 80s and 90s.

But with many investment experts advising that Bitcoin is screaming ‘Buy Right Now’, the cautious institutional investors and high net individuals might be gradually warming up to the new investment industry of crypto.

Current market analysis indicate that Bitcoin (BTC) is currently trading at $7,657 at the moment of writing this. BTC deviation from this level has only seen a 0.7% decrement in the last 24 hours indicating some much needed stability in the crypto-markets as we head into the weekend.