Every bitcoin milestone produces more stone-throwers. As the price of the flagship cryptocurrency topped $39,000 on Monday, Luke Ellis, the CEO of the world’s biggest publicly listed hedge fund firm Man Group, joined the chorus of skeptics, likening the crypto market upsurge to the Dutch tulip craze centuries ago.
Crypto Is A “Pure Trading Instrument”: Man Group CEO
Speaking to the Financial Times, Ellis suggested that the utility of cryptocurrencies emanates from their volatility, therefore making the asset a “pure trading instrument”. To the CEO, the crypto market is very similar to a tulip bulb.
If you have been in crypto long enough, you have obviously noticed that naysayers often compare crypto to the tulip mania of the 1630s where the price of some tulip bulbs exploded before ultimately falling hard.
Nonetheless, the London-based hedge fund with approximately $127 billion in funds under management, is trading crypto using its innovative quantitative models of price anomalies.
“We like to be long and short depending on what the models say is likely to happen to the market and we will trade it long and short just as happily and in as big a size as market liquidity lets you trade,” Ellis explained.
However, taking advantage of the profitable wild price swings in the crypto market is not an endorsement of crypto as an asset class by Man Group. The CEO categorically stated that the hedge fund only trades crypto rather than offering it as a long-term asset management product. In other words, crypto assets are mere “things to trade” for Ellis.
He goes on to add that most crypto investors are fully aware that these tokens have no value when it comes to their “ultimate utility”. At the same time, he admits that advancing inflation — in the wake of stimulus measures taken by governments to prevent post-COVID economic downturn — is one of the key reasons why crypto has become more appealing and made its way to a majority of asset portfolios.
Notably, the Man Group chief believes blockchain technology has the potential to improve the efficiency of payment channels, but this does not give crypto assets any value.
Ellis is not the first critic to dismiss cryptocurrencies as tulip bulbs. Economist and ferocious bitcoin critic Nouriel Roubini has previously compared bitcoin “to other famous historical bubbles and scams — like Tulip mania, the Mississippi Bubble, the South Sea Bubble”. To no one’s surprise, Dr. Doom promptly retweeted Ellis’ recent statement.