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Cryptocurrencies have “no inherent worth” but make good trading opportunities because their prices gyrate, Luke Ellis, CEO of London-based Man Group, the world’s largest manager of listed hedge funds, said in a Financial Times interview.
“If you look at cryptocurrencies as a whole, it’s a pure trading instrument,” he said.
“There is no inherent worth,” he added.
He dismissed the argument that cryptos have an inherent value because each version issues only a limited number of coins.
“You can have an infinite number of cryptocurrencies,” he said. “Anyone can start another one any day.”
However, cryptos are worth trading “because they go up and down a bunch.”
On 26 July, for example, Bitcoin rose as much as 15 percent, nearing $40,000, simply on a rumor that Amazon might begin accepting it as payment.
Man, which manages $127 billion in assets, uses computer modeling to dictate trades in 15,000 stocks, “thousands” of credit instruments, and 800 other markets, Ellis told the FT.
“We like to be long and short, depending on what the models say, and we will trade [crypto] long and short just as happily, and in as big a size, as market liquidity lets you,” he said.
Ellis sympathized with people grasping at cryptocurrencies as a defense against inflation, which is “the number-one thing clients are worried about,” he said.
“I think we stay in a world of very low [interest] rates until central banks lose control,” Ellis said, “and when they lose control it’s not going to be fun.”
TREND FORECAST: Yes, when inflation spikes, so too will cryptocurrencies along with gold and silver. And as we have noted, should governments of the U.S. and Eurozone crack down on the crypto market, much of the money going into crypto’s will go into precious metals.
The reality of them doing so has been greatly detailed in the Trends Journal (See “FROM DIRTY CASH TO DIGITAL TRASH”).