Crypto Hedge Funds/Prop Firms - Fad or Future?
What do you guys think of the recent rise of hedge funds and prop firms that specifically trade crypto currencies?
I am currently working in the equity space but have been approached and even offered by some of these firms recently. The terms are generous, and they are a good way to get around non-competes.
Some people in traditional asset classes seem to think of these setup as jokes, or simply a fad though, and I am worried if I will be able to go back to equities if it does not work out.
What do you think?
What funds are you talking about specifically? You’re already anonymous - no reason to be so vague lol
I'd say the vagueness is justified here.. those small new firms might not be in discussions with that many people, so it could backfire pretty easily.
To answer OP's question - I think they're a fad. Personally wouldn't be worth the risk of getting pigeonholed as a 'crypto guy', but maybe I'm just cynical and you see more future in the technology than I do.
https://ca.finance.yahoo.com/news/345-billion-giant-bet-bitcoin-2200368…
I am a crypto cynic as well. Still quite a cynic these days but less so with more news of institutions getting into this business. Depending on the holding period of the strategy, it can still be profitable even if the underlying asset is in a bubble. Bubbles can last very long as history has shown.
can you at least tell me how generous we are talking for how many levels of experience?
$0.5M? $1M? $2M? what is generous?
I'm actually curious - what kind of work do you do at a crypto fund? I get the thesis - tiny market cap % vs. gold or some derivative of that.
How do you keep doing work beyond that thesis?
That is a good question. Frankly, I do not have a clear idea either. I should probably find out if the team has a clear thesis/framework or whether they are simply winging it.
Many of the big prop firms have had their own crypto desks for a while now. My view is that cryptocurrency in some form will become mainstream in the future, but it might not be in the form of bitcoin or any other coin specifically. Bitcoin has a bunch of issues that make it not well suited for everyday transactions.
Cryptocurrency seems like a bubble in some ways, but at one point people were saying the same things about the internet, quant investing and many other things, that it would never work and would be a passing fad.
Bill Gates on Letterman re: Internet.
I'm very bullish on crypto in general but what turns me off a little is how cultish the crypto community is. It seems like a lot of them are unwilling to look at and acknowledge anything that could be negative for the space. And I get the feeling that guys like Michael Saylor may be making these big bitcoin bets because of the clout it gives them (Saylor went from an unknown CEO to bitcoin god in months) . With that being said, I have a significant amount of money invested in the space
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