Luke Ellis, CEO of Man Group — one of the world’s largest hedge funds — said he trades in cryptocurrencies because they offer a trading opportunity for investors but he believes cryptos have “no inherent worth”.
In an interview with the Financial Times, Ellis said the volatility of cryptos made them a great trading instrument. The digital assets are among 800 markets and 15,000 individual stocks that his London-based hedge fund trades with more than $127 billion in assets under management.
“If you look at cryptocurrencies as a whole, it is a pure trading instrument. There is no inherent worth in it whatsoever,” Ellis said. “You can have an infinite number of different cryptocurrencies … Anyone can start another one any day.”
While Ellis did not mention bitcoin specifically, in March, he told CNBC that he sees BTC “as a trading instrument, not a thing that you think of as a long term asset allocation play.”
The cryptoverse claims that the value of cryptos such as BTC lies in the fact that they allow people to store value outside of centralized currency systems in something with a provably hard-capped supply, which is more easily verifiable than gold.
Maya Zehavi, a blockchain entrepreneur and founding board member of the Israeli Blockchain Industry Forum, tweeted a response to Ellis’ comments. “It’s easy to see how from the outside crypto seems like a tulip market, especially with institutional money looking to cash in on the returns, but they fail to see people are building real shit that will withstand the hype and serve (traditional finance).”
“Digital assets can certainly have value,” Lyn Alden, a bitcoin investing app advisor and a crypto bull, wrote in a blog post. “Bitcoin’s utility is that it allows people to store value outside of any currency system in something with provably scarce units, and to transport that value around the world.”
Other industry players pointed out that that other crypto assets do not mitigate bitcoin’s scarcity feature, as they are separate assets with different features, goals, and networks.
Even analysts at Ellis’ Man Group said in January that Bitcoin’s volatility is simply part of the price discovery in a new asset class and that these are not bubbles.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?