Cryptocurrencies Are A “Pure Trading Instrument,” says CEO of World’s Largest Hedge Fund
Luke Ellis, the CEO of Man Group, says cryptocurrencies have “no inherent worth whatsoever” and compared them to tulip bulbs mania but added that it’s suitable for trading.
“If you look at cryptocurrencies as a whole, it is a pure trading instrument. It has no inherent value. It’s a tulip bulb,” said Ellis, whose largest publicly listed hedge fund manages $127 billion in assets (AUM) as of March 31.
The London-based hedge fund manager uses quantitative models to make profits off of trends in markets, and crypto is one of them.
Ellis said cryptocurrencies were one of about 800 markets plus thousand of stocks and credits that they operate in. He said,
“We like to be long and short depending on what the models say is likely to happen in the market, and we will trade it in the long and short term with the same happiness and in as large a size as the market liquidity allows you to trade.”
“We trade S&P futures to sushi rice futures.”
But just because the hedge fund trades crypto doesn't mean they are an asset management product in which they “offer value.” Crypto assets, he maintained, are “things to trade because they go up and down a lot.”
Like many people from traditional finance, Ellis is still in the phase of preferring blockchain technology, which he believes has potential, then cryptos that can be of “infinite numbers” because anyone can launch one any day.
While Ellis has his concerns and doubts about cryptocurrencies’ value, he understands what’s driving investors towards them. He said,
“The thing that worries customers the most is inflation.”
“I think we will stay in a world of very low rates until central banks lose control, and when they lose control, it will not be fun.”