MetaverseNFTCoins.com
  • NFT News
  • Crypto News
  • Blockchain
  • Regulations
  • Scams
No Result
View All Result
MetaverseNFTCoins.com
No Result
View All Result

This Hedge Fund Manager Thinks Crypto Speculation Is Headed for a ‘Screeching Halt’

December 6, 2021
in Scams
Reading Time: 3 mins read
A A
This Hedge Fund Manager Thinks Crypto Speculation Is Headed for a ‘Screeching Halt’
ShareShareShareShareShare

Cryptocurrencies could be hit hard by the U.S. Federal Reserve’s effort to fight inflation, hedge fund manager Chris Brown wrote in a November letter to investors in his Aristides Capital hedge funds.

“If the Fed really does hike rates enough to make money considerably less loose, or if markets believe they will, you are going to see certain areas of speculation come to a screeching halt,” he predicted. “The prime example of such asset speculation is cryptocurrency; here lies $2.64 trillion of ‘wealth’ that is backed by nothing and generates no cash flows.”

In the letter, Brown mocked the view that crypto is digital gold, a belief held by those who purport that cryptocurrencies are a hedge against inflation.

“Please don’t tell me you seriously believe Shibalnu or CumRocket or TitsCoin are in any way gold,” he wrote, mentioning some of the more obscure crypto tokens in circulation. “The supply of meme assets is unlimited, and this is no exception.”



He acknowledged that there is a “serious argument” for Bitcoin being digital gold, but then made his counterargument: “First, one can buy gold on the open market for only about two times the cost of bringing gold out of the ground by mining it, whereas currently a Bitcoin trades for ten times the cost of mining one.”

He claimed there is a “financing scam at play here,” illustrating his point using “now defunct, highest-cost” U.S. shale oil and gas producers.

“They financed their business by tons of borrowing, using debt to pay to drill new wells, and using the cash flow from the wells, which decline rapidly, to justify an even bigger borrowing base, which they then borrowed against to drill new wells.”

Those loans were never paid back, energy prices crashed, and creditors were stuck owning the wells. A similar, but stranger, business model is at work in cryptocurrencies, he argued.



“Because financing is so readily available from folks who believe the value of cryptocurrencies will increase forever, most large Bitcoin miners don’t even sell the bitcoin they are mining,” he added.

He claimed they simply raise capital to mine the bitcoin, then instead of selling it, raise more capital to mine more.

“It’s like a low-float stock scam, but also with the features of a multi-level marketing scam because these guys are always trying to ‘grow the network,’”  Brown wrote.

He also mentioned efforts to raise a $1 billion “Bitcoin bond” to be issued by El Salvador that he heard described on a recent Twitter Spaces discussion. The plan is for the country to issue $1 billion in debt, then use half of it to buy Bitcoin and lock it away in a trust for five years. The bond investors get 6.5 percent interest and some proceeds from any Bitcoin appreciation after five years.



“The only thing this requires to work are believers (from Dusseldorf??) willing to take equity-like risk in order to make bond-like returns, and a Bitcoin price that keeps going higher,” he said, adding an “LOL” for good measure.

Brown, whose flagship Aristides Fund is up 31.35 percent for the year after a slight 1.01 percent gain in November, also wrote that he was surprised by Federal Reserve chair Jay Powell’s announcement that the Fed will like start cutting its asset purchase “quite soon.” 

The hedge fund manager previously thought that it would be next May or June before U.S. equities started to trade much lower, but said in the letter that “clearly it’s time to throw that line of thinking out the window.”

“There’s little doubt in my mind that several portions of the financial landscape are currently in a bubble fueled by free money and that the end of free money would be extremely negative for the prices of those bubble assets,” he wrote.



Last month, Aristides’ best performing strategy was single name shorts, with a gain of 165 basis points on a gross basis.

Credit: Source link

ShareSendTweetPinShare
Previous Post

US Regulatory Agencies Deliberate Crypto Road Maps for Banks

Next Post

Gaia EverWorld Secures Polygon Grant and Partners With Binance for Its NFT Pre-sale

Next Post
Gaia EverWorld Secures Polygon Grant and Partners With Binance for Its NFT Pre-sale

Gaia EverWorld Secures Polygon Grant and Partners With Binance for Its NFT Pre-sale

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Weekly Updates

How to spot utility scams, according to AG Rutledge – SWARK Today

How to spot utility scams, according to AG Rutledge – SWARK Today

August 10, 2022
Battle Infinity Reaches At 66%

Battle Infinity Reaches At 66%

August 4, 2022
Sumitomo Mitsui Bank Steps Into NFTs With Bare-Bones Strategy Outline

Sumitomo Mitsui Bank Steps Into NFTs With Bare-Bones Strategy Outline

August 9, 2022
BTC/USD Orbiting 22194 Retracement: Sally Ho…

BTC/USD Orbiting 22194 Retracement: Sally Ho…

August 6, 2022
Dubai Forms a New Group (D2A2) To Strengthen the Digital Sector

Dubai Forms a New Group (D2A2) To Strengthen the Digital Sector

August 8, 2022
MetaverseNFTCoins.com

This is an online news portal that aims to provide the latest NFT news, crypto news, blockchain, regulations, scams, and much more stuff like that around the world. We promise to share only high quality content from the world's best crypto sources. Feel free to get in touch.

What’s New Here!

  • Crypto Broker Genesis Says Lending Business Declined in Q2
  • Australian crypto ownership warrants consumer protection, says regulator
  • MakerDAO plans against sanctions from USDC exposure

Subscribe Now

Loading
  • Contact Us
  • Privacy Policy
  • Terms of Use
  • DMCA

© 2021 - metaversenftcoins.com - All rights reserved!

No Result
View All Result
  • NFT News
  • Crypto News
  • Blockchain
  • Regulations
  • Scams

© 2021 - metaversenftcoins.com - All rights reserved!

  • bitcoinBitcoin (BTC) $ 24,605.00 7.38%
  • ethereumEthereum (ETH) $ 1,899.78 13.22%
  • tetherTether (USDT) $ 1.00 0.02%
  • bnbBNB (BNB) $ 333.25 4.93%
  • usd-coinUSD Coin (USDC) $ 1.00 0.2%
  • xrpXRP (XRP) $ 0.383962 6.07%
  • cardanoCardano (ADA) $ 0.545606 6.78%
  • binance-usdBinance USD (BUSD) $ 1.00 0.2%
  • solanaSolana (SOL) $ 44.21 11.52%
  • polkadotPolkadot (DOT) $ 9.52 9.71%
  • dogecoinDogecoin (DOGE) $ 0.072436 5.78%
  • avalanche-2Avalanche (AVAX) $ 29.72 7.17%
  • staked-etherLido Staked Ether (STETH) $ 1,837.77 13.42%
  • shiba-inuShiba Inu (SHIB) $ 0.000013 16.91%
  • daiDai (DAI) $ 1.00 0.04%
  • matic-networkPolygon (MATIC) $ 0.946084 7.3%
  • tronTRON (TRX) $ 0.071049 3.58%
  • wrapped-bitcoinWrapped Bitcoin (WBTC) $ 24,588.00 7.02%
  • ethereum-classicEthereum Classic (ETC) $ 39.10 5.31%
  • okbOKB (OKB) $ 19.26 7.34%
  • nearNEAR Protocol (NEAR) $ 5.88 8.75%
  • leo-tokenLEO Token (LEO) $ 4.76 3.33%
  • litecoinLitecoin (LTC) $ 62.45 6.45%
  • ftx-tokenFTX (FTT) $ 32.21 9.47%
  • chainlinkChainlink (LINK) $ 9.15 8.35%
  • uniswapUniswap (UNI) $ 9.31 10.23%
  • crypto-com-chainCronos (CRO) $ 0.154414 6.94%
  • cosmosCosmos Hub (ATOM) $ 12.12 11.9%
  • flowFlow (FLOW) $ 3.07 4.93%
  • stellarStellar (XLM) $ 0.126802 4.82%
  • moneroMonero (XMR) $ 168.27 5.44%
  • bitcoin-cashBitcoin Cash (BCH) $ 144.00 7.95%
  • algorandAlgorand (ALGO) $ 0.369696 7.77%
  • vechainVeChain (VET) $ 0.033154 11.32%
  • filecoinFilecoin (FIL) $ 8.90 10.42%
  • apecoinApeCoin (APE) $ 7.19 5.06%
  • internet-computerInternet Computer (ICP) $ 8.56 9.77%
  • decentralandDecentraland (MANA) $ 1.08 6.29%
  • chain-2Chain (XCN) $ 0.088287 1.6%
  • hedera-hashgraphHedera (HBAR) $ 0.080733 8.45%
  • quant-networkQuant (QNT) $ 130.15 6.66%
  • the-sandboxThe Sandbox (SAND) $ 1.36 5.86%
  • tezosTezos (XTZ) $ 1.94 8.68%
  • axie-infinityAxie Infinity (AXS) $ 18.75 6.68%
  • theta-tokenTheta Network (THETA) $ 1.63 7.52%
  • aaveAave (AAVE) $ 111.61 14.25%
  • elrond-erd-2Elrond (EGLD) $ 68.33 11.28%
  • lido-daoLido DAO (LDO) $ 2.71 19.35%
  • fraxFrax (FRAX) $ 1.00 2.03%
  • eosEOS (EOS) $ 1.32 11.48%