Will Crypto Thrive? Investment Influencers Are Divided Over Its Future
Billionaire investors and fund managers weigh in about the future prospects of digital assets at the eighth annual Delivering Alpha conference.
The crypto space got a hefty dose of information from institutional investors on Wednesday as CNBC held its annual Delivering Alpha conference.
Attendees ranged from Barry Silbert, the founder & CEO of Digital Currency Group (DCG), a.k.a. the Crypto King, to billionaire investor Howard Marks. While he wasn’t at the conference, Federal Reserve Chair Jerome Powell also weighed in on the impact of cryptos on Wednesday.
Let’s get to what was said.
Has Bitcoin finally reached its bottom?
Bitcoin finally got back above $7,500 this week after being stuck below that price for months. So the natural question for investors at the conference was, “now that it’s above $7,000, has it hit its bottom?”
Silbert, who bought the crypto when it was a mere $10, said he thought the $7,000 level was the crypto’s bottom.
“A lot of institutional money can drive the thread pattern, looking for a place to get in. The bears just kind of ran out of energy; ran out of Bitcoin to sell. From a technical perspective, it’s starting to look pretty good.”
The never Bitcoiners
One thing that remained clear at the conference is that there are still plenty of people who are skeptical of Bitcoin.
Ken Griffin, founder and CEO of global investment firm Citadel, said not a single portfolio manager has advised him to buy cryptos and he has a hard time being a liquidity provider to a product he thinks is not needed.
“There’s no need for cryptocurrencies. They are a solution in search of a problem from my perspective. What’s unfortunate is the amount of hype and the number of earlier investors who’ve been caught up in this hype.”
Howard Marks, co-chairman of global investment manager Oaktree Capital, echoed Griffin’s sentiments.
"It's not an investment; it's a trade. In the long run, I think it will be shown not to have any substance. Not because [people] can’t specify its intrinsic benefits. Not because they can judge the intrinsic value. But only because they think it's going up.”
Powell, who spoke before members of Congress on Wednesday, echoed this, saying cryptos are not real currencies because they have no intrinsic value. He added that the Fed is not interested in doing a digital currency of its own.
Putting their money to work
Silbert said since he got into trading Bitcoin, he’s “gotten through two 80% corrections”. So when he hears the naysayers, he knows their criticism is coming from a place of being uninformed.
“It’s the same old criticism; it’s just the uninformed. Once they understand it, they come out saying ‘I’m going to put some money in this crypto’.”
Pointing to Grayscale Investments, the largest asset manager in the crypto sphere and part of DCG, Silbert showcased that mainstream funds are starting to put some money to work in the crypto space. Earlier on Wednesday, Grayscale announced it had raised $250 million to date, and 56% of that came from institutional investors. A year or two ago, that was almost non-existent.
Mark Lasry, the CEO of Avenue Capital, spoke about Bitcoin’s strong potential to continue to catch on with investors. He said:
"As it gets more into the mainstream, and as more markets end up allowing it to trade freely, to me that's more of the bet.”
Lasry sees people investing in Bitcoin standing to make five to 10 times their money in three to five years. His only regret is he did not invest in it earlier.
An interesting point Silbert made about Wednesday’s conference was this:
“When the chair of the [Federal Reserve] says negative things about Bitcoin, and Howard Marks says negative things about Bitcoin, and Ken Griffith says negative things about Bitcoin, and Bitcoin doesn’t move, that’s a really bullish sign for Bitcoin.”