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If you’re one of the millions of US adults taking aspirin daily as a preventative measure, two new studies have bubble-bursting news: Doing so may not do any good—and could actually cause harm. Researchers in both studies found that even low-dose aspirin carries a risk of internal gastric bleeding,…
There’s a tendency, societally, to place self-appointed experts on a pedestal. If a professional’s job title is impressive enough, and their resumé suitably polished, they are liable to be lauded, with their every sound bite liable to be quoted and turned into an opinion piece. In the world of cryptocurrency, this phenomenon can be observed with the deference given to hedge fund managers. As the events of this year have shown, however, crypto fund managers are as fallible as the rest of us.
Beware the Silver-Tongued Hedge Fund Manager
As the saying goes, anyone can make money in a bull market, and in 2017, crypto hedge funds produced triple-digit percentage profits for fun. The best of these ventures granted investors returns in excess of those they could have made simply for holding BTC, and in doing so, turned their fresh-faced founders into revered oracles who could do no wrong.
Then came 2018.
Polychain Capital, led by the fantastically named Olaf Carlson-Wee, made 2,303% last year. This year, it has lost 40% of the $ 800 million it made its investors due to a combination of losses and early investors pulling out. More controversially, the fund’s 30-year-old founder chose to cash out a significant portion of his holdings several months ago, and is now largely in fiat, reports the WSJ. It quotes early Polychain investor Fred Ehrsam as pondering the genius of the once-lauded Olaf Carlson-Wee. “How much of it is luck, how much of it is skill and how much of it is luck disguised?” he wonders.
Crypto Fund Managers Are Faring No Better Than Retail Investors
Crypto hedge funds are naturally constrained by market forces. In a year in which BTC is down 55%, even the astutest of managers would have struggled to produce a profit. What these bearish conditions have illustrated, however, is that crypto funds are often no smarter than the “dumb” decisions made by retail investors. It was only a few months ago that Pantera Capital was maintaining an EOY prediction of $ 21,000 for BTC, a scenario which now looks unlikely.
The Eurekahedge Crypto-Currency Hedge Fund Index tracks the performance of crypto funds, and their aggregated results for 2018 aren’t pretty. The funds are down an average of 51.58%, meaning they’ve scarcely performed better than a basic buy-and-hold BTC strategy. Given ethereum’s continued collapse, it is likely that September will close out with these funds nursing even heavier losses.
Hedge Funds Are Down 25% in Three Months
The Eurekahedge tracker records average losses of 25% over the last three months. In 2017, these same funds reported an average annual profit of 1,708%. Impressive, but not as mind-blowing as the figure may suggest, given that BTC gained 1,318% that year and 13 other cryptocurrencies outperformed it, including ethereum with a 9,162% gain and ripple with over 36,000%. Any manager who put 80% of the funds at their disposal in BTC and the remaining 20% in any top 10 crypto would have effortlessly made 1,700% or more for their investors.
In a week in which the SEC has taken action against the first US crypto fund, it appears their luster is fading. (Its manager, Timothy Enneking, was quoted by Coindesk back in April, wrongly opining that the crypto winter was “largely over”.) The vast majority of these funds are law-abiding, and for high net worth individuals seeking a passive return – in a good year at least – they remain an attractive option. In years of exponential growth, a well managed fund might be a good bet. But when the market sours, a hedge fund, whose investors can seek no sanctuary in stablecoins, is a very precarious place to be.
Do you think hedge fund managers make better picks than retail investors om average? Let us know in the comments section below.
Images courtesy of Shutterstock, and WSJ.
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A Tesla driver who said he thought his car was in Autopilot mode crashed into the back of a firetruck in San Jose early Saturday. The California Highway Patrol says the Tesla rear-ended a fire engine that was stopped with its emergency lights activated along US-101 around 1am. The 37-year-old…
Parts of an operation linked to Russian military intelligence targeting the US Senate and conservative think tanks that advocated for tougher policies against Russia were thwarted last week, Microsoft announced early Tuesday.
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Winona Ryder and Keanu Reeves are doing publicity for their fourth movie together, Destination Wedding , and Ryder suggests they might accidentally be more than co-actors. “We actually got married in Dracula ,” she tells Entertainment Weekly , referring to the 1992 movie. “No, I swear to god I think we’re married in…
New indicators point to corporate executives starting to wisen up to the notion that so-called blockchain technology is some kind of cure-all drug for their industries that they can just extract from Bitcoin and drop the cryptocurrency behind. The latest example of this is a recent survey by Deloitte, showing that 44% of American executives think “blockchain is overhyped”.
“Blockchain Fatigue” Is Setting In
Accounting giant Deloitte has conducted an international survey of over 1,000 “blockchain-savvy” executives from seven countries, including the US, Canada, Mexico, UK, France, Germany and China. The data shows that 39% of respondents around the world believe blockchain is “overhyped.” And in the US this figure is even higher, with 44% see blockchain as overhyped, up from 34% in 2016. The main problem is that despite the constant babble about blockchain, there are actually very few active use cases. As a result, Deloitte says “blockchain fatigue” is beginning to set in among those who feel “its potential has been over-communicated, while its real-world benefits remain elusive.”
The analysis explains that established firms face a host of legacy concerns while trying to make blockchain fit into an already existing business model that may or may not benefit from it. Respondents also see a variety of obstacles moving forward, with a third saying current return on investment remains “uncertain.” And only 34% say their company has initiated deployment in any way.
Shift Towards Pragmatism
Trying to put a positive spin on the results, Deloitte analysts wrote that: “On their own, these numbers seem to indicate that blockchain is moving in the wrong direction. However, we believe this change in attitude is more reflective of the shift toward the pragmatists in the blockchain community.” They added that: “Based on our experience with the emerging disruptors, we believe blockchain adoption is far more advanced in the United States than the Deloitte global survey indicates.” However, it’s important to remember that their 2016 report also overestimated the pace at which blockchain production will materialize compared to what really happened so far.
The analysis notes that there is a significant number of skeptics who view blockchain as the overhyped engine behind a volatile and unregulated financial market. The writers try to put part of the blame for this on cryptocurrency traders, who supposedly “have helped to bring mainstream notoriety to blockchain,” among the general public. Still, there are signs the hype is not yet over. For example, nearly 40% of executives reported that their firms will invest $ 5 million or more in blockchain technology in 2019.
Does the idea of corporate “blockchains” make sense to you? Share your thoughts in the comments section below.
Images courtesy of Shutterstock.
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The post 44% of American Executives Think “Blockchain Is Overhyped”, Deloitte Survey Finds appeared first on Bitcoin News.
Police say two Minnesota beer deliverymen prevented a suicidal man from jumping off an interstate bridge in St. Paul by offering the man a Coors Light, the AP reports. Authorities say Jason Gable and Kwame Anderson were driving their truck Wednesday morning when they spotted the man clinging to the…
Harley-Davidson Inc. on Monday unveiled a plan to expand motorcycle ridership and increase global sales with bikes that will be hardly recognizable as Harleys – among them electric scooters and small bikes destined for foreign markets.
The plan, perhaps the most aggressive in the company’s 115-year…