Anthony Scaramucci’s SkyBridge fund tells bitcoin investors not to sweat over the cryptocurrency’s wild volatility

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Bitcoin has fallen sharply from recent highs.

Bitcoin may have tumbled from $65,000 to below $50,000 in just over a week, but investors should hold on and not sweat over the wild volatility, according to SkyBridge Partners.

“The reality of cryptocurrencies and even bitcoin… is that if you make an investment today… you have to expect multiple 20-30% pullbacks in the bull market phase,” SkyBridge’s co-chief investment officer Troy Gayeski told Bloomberg TV on Wednesday.

SkyBridge Capital – which was founded by Anthony Scaramucci, who later spent 10 days as Donald Trump’s White House communications director – remains bullish on bitcoin over the long term, Gayeski said.

The investment chief cited “extraordinary” money supply growth and said cryptocurrencies remained “in the early innings of the adoption cycle”. His advice to bitcoin investors was “don’t sweat the vol” – that is, volatility.

Bitcoin’s rally has been remarkable for its sheer speed and the amount of attention it has captured on Wall Street, with big banks and hedge funds getting involved.

The world’s most widely traded cryptocurrency has risen by 530% in the last 12 months. It hit a high of close to $65,000 in mid-April, boosted by the hype around Coinbase’s direct listing, before tumbling to near $47,000 a few days later. It has since rebounded somewhat and traded at around $54,500 on Thursday.

“This bull market is still younger than the last two, in terms of length,” Gayeski said, adding that he could see bitcoin doubling in value by the end of the year.

However, he said it may turn out to be the case that there is less price growth in the future than in previous bull markets. But he added: “It’s really hard to argue that it’s going to be a shorter bull market, there’s really no fact or basis for that, in our opinion.”

Gayeski said SkyBridge believes bitcoin will become the dominant store-of-value asset that investors turn to when they’re worried about inflation or market stress, like gold.

Goldman Sachs on Wednesday questioned this view, however, arguing bitcoin is so far failing as digital gold. The bank’s analysts argued bitcoin’s massive energy consumption, its lack of real uses, and competition from other cryptocurrencies are obstacles to more widespread adoption.

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‘Volatility is your friend’: A former Goldman Sachs hedge-fund boss says crypto investors should embrace bitcoin’s wild price swings – and explains why it’s one of the asset’s key features

Raoul Pal
Raoul Pal, co-founder and CEO, Real Vision Group.

  • Cryptocurrency investors like bitcoin’s volatility, according to Real Vision founder Raoul Pal.
  • Volatility is a key feature that has helped bitcoin see an explosion in value since its inception, according to Pal.
  • “I think you can’t avoid the fact that it’s the best performing asset class in all recorded history already,” he said.
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Raoul Pal – a former Goldman Sachs hedge fund manager and current founder/CEO of Real Vision TV – suggested at a virtual event this week that bitcoin’s volatility shouldn’t scare investors. He instead argued that it should be looked at positively.

“It’s a feature that drives the risk-reward,” Pal said at an “Investing in Crypto” conference hosted by MarketWatch. “So without that volatility, you can’t have compounded annual returns of 230%. Volatility is your friend in this occasion.”

Bitcoin hit an all-time high of almost $62,000 in mid-March, and was last trading just above the $58,000 threshold on Friday. It is up 101% year-to-date, and about 700% over the last 12 months. By comparison, the S&P 500 is up 9% year-to-date and 47% in the last 12 months.

Pal has previously predicted bitcoin will be worth $1 million in five years.

“The volatility is highly skewed to the upside, doesn’t mean you don’t get sharp downside shocks and you can’t see big moves,” Pal said, adding that bitcoin has seen a massive appreciation since its inception and that’s what investors want in risk-seeking assets.

The digital asset’s volatility fell nearly 40% on a monthly basis to a three-month low in March, with a knock-on effect on trading volumes, which fell 5% to a year-to-date low of about $255 billion, according to data from Kraken.

Earlier this month, JPMorgan said a decline in bitcoin’s volatility has made it more attractive to institutions and that could boost its adoption.

But according to Pal, institutional investors, sovereign wealth funds, and pension funds are more taken by bitcoin’s ability to generate top returns within a portfolio, rather than being put off by its volatility.

“Everybody is getting involved, is involved, or is in the due diligence process of doing it,” he said. “I think you can’t avoid the fact that it’s the best performing asset class in all recorded history already, and it is the best performing asset over any period of time.”

The former hedge fund manager said most people in the crypto world don’t like regulation, but he is in favor of it as long as it is a “light-touch” oversight that allows people to build on innovation. He doesn’t expect crypto regulation to hurt prices, but to instead attract more capital in the space and provide confidence to people in the industry.

Read more: A 29-year-old self-made billionaire breaks down how he achieved daily returns of 10% on million-dollar crypto trades, and shares how to find the best opportunities

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A bitcoin ‘fear gauge’ measuring the cryptocurrency’s volatility has begun trading for the first time

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The bitcoin price hit a record high of $49,998 on the Binance exchange

A bitcoin “fear gauge,” similar to the Cboe Volatility Index (VIX) investors use to gauge volatility in the stock market, saw its first trades on Wednesday.

The T3i BitVol Index measures the expected 30-day implied volatility in bitcoin derived from tradable bitcoin option prices. It was launched in July 2020 by T3 Index, a research-driven financial firm. It also has a separate index for ethereum.

The transaction consisted of a March expiry 1-by-2 call spread, first reported by Bloomberg. It was bought at no cost. LedgerPrime, a quantitative digital asset investment firm, was the market-maker, according to Bloomberg.

Upon launch, T3 CEO Simon Ho said the BitVol index will allow investors to be “able to make more informed trading decisions as a result.”

Bitcoin on Wednesday flirted with its record highs, reclaiming the $1 trillion market capitalization mark and nearing the record $58,000-level. The price of the world’s most popular cryptocurrency has been buoyed by major institutions piling in, as well as speculation that the third round of stimulus checks will result in more investment in bitcoin.

The BitVol index, the company said, is model-free and uses the variance swap methodology. It is also “designed to use the full range of option strikes to best capture the market outlook on expected volatility.”

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Bitcoin above $51,000 is unsustainable unless volatility subsides, says JPMorgan

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  • Bitcoin’s current price above $51,000 is “unsustainable” unless volatility subsides, JPMorgan said in a note. 
  • Strategists estimate a large portion of recent flows into the token have been driven by speculation. 
  • If the token’s volatility converges to that of gold, bitcoin could reach $146,000, they added.
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Bitcoin’s current price is “unsustainable” unless the cryptocurrency’s volatility dies down, according to JPMorgan.

The cryptocurrency flew to new heights above $52,800 on Friday morning, bringing its year-to-date gains to more than 80% as the breakneck rally powers ahead. Just one year ago, bitcoin traded around $10,000.

The cryptocurrency has achieved the fastest-ever price appreciation of any “must-have asset” to which it is often compared, like Gold in the 1970’s and internet stocks in the 1990’s, noted JPMorgan. But the rally has left wary investors reminded of the mania in 2017 that ended in a steep drop. 

Strategists led by Nikolaos Panigirtzoglou wrote in Tuesday note that unless bitcoin’s price swings subside “quickly from here,” the current rally could end in disappointment. 

The strategists estimate that $11 billion of institutional money has flown into bitcoin since the end of September, but they say  a large portion of that has been dominated by “speculative investors seeking to front run other more real-money institutional investors.”

Despite the firm’s short-term caution, JPMorgan sees bitcoin’s price growing significantly higher in the long run.

If bitcoin’s volatility converges to that of gold, JPMorgan has a “theoretical price target” of $146,000. However the strategists said this convergence would be a “multi-year process” and would also depend on bitcoin ownership tilting more institutional and less retail over the coming years.

“For the bitcoin market cap to match the total private sector investment in gold via ETFs or bars and coins, we estimate that mechanically bitcoin prices would need to rise to $146k,” JPMorgan added. 

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Bitcoin’s pullback slashes 23% from crypto evangelist Michael Saylor’s MicroStrategy

Bitcoin’s pullback leads to volatility in MicroStrategy.

  • Noted bitcoin bull Michael Saylor saw shares of his company MicroStrategy fall as much as 23% on Wednesday.
  • The volatile move is a result of MicroStrategy’s significant bitcoin exposure.
  • JPMorgan analysts warned clients in a note of the increased volatility that results from holding bitcoin.
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Bitcoin’s pullback slashed as much as 23% from shares of crypto bull Michael Saylor’s MicroStrategy on Wednesday.

Although MicroStrategy doesn’t mine bitcoin itself, the business intelligence firms is one of only a few companies to buy into bitcoin in a big way. MicroStrategy owns 71,079 bitcoins, worth an estimated $3.21 billion at current prices.

For reference, the company’s market cap is $9.25 billion as of Wednesday, meaning MicroStrategy owns a third of its net value in Bitcoin.

MicroStrategy acquired the majority of its bitcoin in 2020 at prices well below current levels. In fact, according to a press release from the company, it owned 70,470 bitcoins as of Dec 21, which were acquired at an aggregate purchase price of approximately $1.125 billion or $15,964 per bitcoin.

Read more: BlackRock says investors haven’t fully priced in the structural changes brought about by the pandemic – and pinpoints 2 areas of the market that can still run for years

Saylor’s business intelligence firm has seen a monumental 732% rise in share prices during the past six months as bitcoin climbed.

And when Tesla announced a $1.5 billion investment in the cryptocurrency on Monday, sparking newfound hope for institutional investment, a move to record highs of over $48,000 helped MicroStrategy break the $1000 per share mark.

Michael Saylor has been at the forefront of a move by institutions into Bitcoin for some time and that position was solidified after he held a “Bitcoin for Corporations” conference on February 3 and 4.

In an interview with Ran Neuner, former host of CNBC’s “Crypto Trader,” Saylor said 7,000 companies and around 8,500 people attended the event, exceeding his expectation of 2,000 attendees.

Saylor also noted he held the event “by popular demand” after he was asked for “thousands” of meetings from prospective institutional bitcoin buyers to discuss legal, logistical, and security details.

Read more: BANK OF AMERICA: Buy these 7 online-retail stocks that are ‘structural winners’ set to build on strong 2020 gains – including one with 41% upside

Tesla and Microstrategy may entice other corporate treasuries to hold bitcoin, but the move is risk. JPMorgan strategists led by Nikolaos Panigirtzoglou warned clients of the potential for increased volatility if companies start holding significant amounts of bitcoin.

“The main issue with the idea that mainstream corporate treasurers will follow the example of Tesla is the volatility of Bitcoin. The addition of BTC would cause a big increase in the volatility of the overall portfolio of large companies. BTC allocation could mean the portfolio’s volatility rises to 8% due to Bitcoin’s 80% annualized volatility,” the research note states.

MicroStrategy traded down 22%, at $990.66, as of 3:53PM E.T. on Wednesday.

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