I really wish I knew how he is hedging his bets on this.
One of the first rules you learn in managing other peoples money is always hedge the downside. Or put another way, you need asymmetric upside/downside risk inorder to make any investment.
One of the biggest risks to bitcoin is the old saying that in down markets all products have a correlation of 1. Meaning when panic sets in, leveraged firms, which is almost all hedge funds, have to deleverage.
Unfortunately, in a large crash this means that everything gets sold pushing down prices more and causing another round of selling.
If the US cash equities markets does have a large crash this year, bitcoin is in the cross hairs as one asset that could have a selling spree that retail money has no hope of supporting.
EDIT
Ah this is his venture capital fund, so I guess the LP's are used to not being able to hedge and hence the naked speculation is appropriate....
One of the first rules you learn in managing other peoples money is always hedge the downside. Or put another way, you need asymmetric upside/downside risk inorder to make any investment.
One of the biggest risks to bitcoin is the old saying that in down markets all products have a correlation of 1. Meaning when panic sets in, leveraged firms, which is almost all hedge funds, have to deleverage.
Unfortunately, in a large crash this means that everything gets sold pushing down prices more and causing another round of selling.
If the US cash equities markets does have a large crash this year, bitcoin is in the cross hairs as one asset that could have a selling spree that retail money has no hope of supporting.
EDIT
Ah this is his venture capital fund, so I guess the LP's are used to not being able to hedge and hence the naked speculation is appropriate....