Hedge Fund Manager Regrets Earlier Dismissive Stance
Kyle Bass, a US based hedge fund manager, admits that he was wrong to first be dismissive of Bitcoin. The high profile financier is well known for the returns he was able to generate from betting against the housing bubble in 2007.
Bass, who runs Hayman Capital Management out of Dallas, made the comments to Grant Williams on the real vision podcast. Bass was previously quite sceptical about the technology claiming that about 3 years ago he thought that there was nothing underpinning the technology. In the podcast however, Bass regrets that initial assertion
First, I admit I made a big mistake–early on, I was dismissive of digital assets and specifically bitcoin in its infancy. Other investors were on top of this 3 to 4 years ago and my naive view at the time, after spending only a few hours, was that there was nothing underpinning the value of bitcoin, no military and no economy.
Indeed it can be quite hard for most traditional asset managers and investors to comprehend a digital currency. Unlike traditional assets such as currencies, equities and commodities. There is no central issuing authority and the asset does not generate income.
What makes Bitcoin truly unique is that it is not controlled by anyone. No entity can really impact on the supply of Bitcoin or how it can be used. It is entirely contingent on hard mathematical formulas that cannot be reversed. Moreover, it is a natural inflation hedge, one only has to look at the declining purchasing power of the US dollar as an example.
This is something that Bass now understands as he mentioned that Bitcoin is a "digital gold rush". He acknowledges that the Gold rush is based on personal capital rather than institutional demand as there is not really a framework for it yet.
This is something that could one day change. There could once again be moves a foot to list a Bitcoin ETF. This would allow a lot of these institutional investors the chance to hold some form of the digital currency. It could also increase liquidity in the market and reduce the amount of volatility that is present.
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Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.