- After a good weekend, Bitcoin now trades just below USD 4,750 at time of writing
- Bitfinex lists multi-million dollar crypto hedge fund
- US Federal Reserve cuts interest rates again as quantitative easing deepens
After enjoying a weekend of strength, Monday trading has seen Bitcoin slip down from its USD 5,000 support range, with prices going right now below USD 4,750 (CoinDesk). It will be some blood on the streets before the global economy recovers, but crypto will also have its fight cut out.
Whatever the outcome today on the markets, trading is not going anywhere and the latest news from crypto exchanges show that the industry is going places. One of the biggest crypto exchanges globally, Bitfinex, who is famed as the issuer of popular stablecoin Tether (USDT), is now listing a crypto hedge fund worth millions of dollars.
Bitfinex will be listing the fund, Fulgur Alpha, currently worth USD 280 million. The fund is based in the Bahamas right now and is only accessible to professional investors. It is a move that both parties hope to result in an increase in assets under management in 2020, despite the current market setback.
At the moment, Declhain Limited, a crypto-asset custodian service provider, is holding all of Fulgur Alpha’s digital assets. Regulatory compliance is being dealt with by Deltec Fund Services based in the Bahamas, which is a division of financial services firm Deltec International Group.
Delchain Limited executive head of operations Bruno Macchialli said that the fund had a traditional set up that has at its core a mechanism for diversifying risk. According to him, the fund should be considered as a “blueprint for institutional investment in crypto”.
Crypto hedge funds have been enjoying a bumper start to the year, with January 2020 the best ever first month of returns for them, as average returns saw a 21.15% gain. February did show a slight dip with 1.31% losses, and it is very likely this month will show even deeper losses, but this will do little to dampen the popularity of crypto hedge funds. They have allowed traditional investors not necessarily interested in crypto to dip their toes into Bitcoin and others, just like that of investor Bill Miller, whose Bitcoin addition saw his fund grow over 40% last year.
But if the situation has been bad for crypto markets, it is probably a lot more dire for traditional markets as the US Federal Reserve called for an unprecedented interest rate cut, leading to global tremors where the United Kingdom’s FTSE 100 plunged depths below 5,000 points for the first time since 2011, and even EasyJet losing a third of its share value.
Bitcoin analysts also noted that the drastic measures which saw the US central bank cut rates or inject vast amounts of cash into the ailing economy, would probably be followed by weakening moments. Morgan Creek Digital co-founder Anthony Pompliano said:
“The last time the Fed did an emergency rate cut was during the 2008 financial crisis. Over the last two weeks, they did two separate emergency rate cuts that totaled 1.5% and brought us to 0% interest rates… This is not a drill. These are unprecedented actions by the Fed.”
US Treasury Secretary Steven Mnuchin had earlier boasted that there was “almost unlimited” liquidity available to US banks and businesses, suggesting that they were not going to hesitate to print even more money as demanded. But Bitcoin analysts will probably not be perturbed, and will be calling for the house of cards to fall, since people will then realize that Bitcoin is not able to be manipulated by any central bank or entity. It has already showed that even without external intervention, it can rein in volatility and stabilize markets by itself. Not like stock markets that can shut down if losses are high and fast.
PlanB, famed crypto influencer credited with creating the Bitcoin stock-to-flow model, summarized:
“…The difference with #btc is that all that leverage/debt is cleared by the drop, all leveraged longs are liquidated, gone… No circuit breakers, no bailouts, that is great, the system clears itself. Very different from stocks and bonds markets.”
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