Hedge funds bolstered their bitcoin portfolios amid market turmoil on Monday. FalconX Research Boss Says Investors Are Betting Bitcoin Will Become Digital Gold As traders predict the price of Bitcoin will reach $100,000 by the end of the year, they have boosted the cryptocurrencies.
Institutional investors scooped up bitcoin in droves during Monday's market turmoil, in part because they were betting on the cryptocurrency eventually cashing in on its reputation as digital gold.
FalconX Research Head David Lavant who spoke to this said News After data from crypto prime broker showed that among its clients, 57% of proprietary trading desks, 63% of hedge funds, 61% of venture funds and 72% of retail aggregators were looking to buy crypto on Monday.
They are particularly interested in Bitcoin.
“Typically when we're net buyers or net sellers, it's like 52%, 53%,” Lavant said. “These are relatively lopsided flows. … It's also not common for us to see every investment person in the same direction.”
While many investors liquidated their crypto holdings earlier in the week, the sell-off was due to short-term fears that “seem to outweigh the outlook in the medium term.”
The comments highlighted bullish sentiment among crypto industry stakeholders, such as Bitwise Chief Investment Officer Matt Haugan, who said the bloodshed was a huge opportunity in disguise.
And many traders are putting their money where their mouth is, which will only pay off if Bitcoin hits a new record high of $100,000 before the end of the year.
Lavant said the institutional players' deals this week were based on the assumption that the world's largest cryptocurrency would become a safe haven.
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“Bitcoin has a lot,” he said. “The macroeconomic background is very interesting for Bitcoin, all the deep things that Bitcoin was designed to protect against — they're kind of absorbed.”
However, he said, there is still some way to go before bitcoin becomes equal to gold.
Digital gold
Originally envisioned as digital cash, bitcoin is too volatile an asset to pay the rent or buy a coffee — despite infamous stories about early adopters Buy a pizza with that.
Because of its limited supply, its proponents now believe that gold can serve the same role it has often held throughout human history — a safe-haven asset whose value remains stable or increases amid market and geopolitical turmoil.
Those hopes have yet to materialize.
“Bitcoin is like gold, but more like gold in the 70s than gold now,” Lavant said.
The 1970s mark the end Bretton Woods The gold standard meant that the US dollar could no longer be exchanged for fixed amounts of gold.
It is unsupported – a fiat currency, welcomed by many economists, but used derisively by Bitcoin proponents today.
“This is the first time the market is thinking about a non-sovereign monetary asset, and what the role of that asset is in a world of pure fiat currencies,” Lavant said.
“This is what we achieved in 1971. If you look at the price of gold, you are going to see an uptrend, but it is very volatile with huge draw downs. Gold has risen 20-fold during that period, but there have been many sharp corrections.
Lavant wasn't the only one to create the analogy: so was billionaire hedge fund manager Paul Tudor Jones Said Bitcoin reminds him of gold in the 1970s.
Bitcoin's overall share of the crypto market — a concept dubbed “bitcoin dominance” by the industry — has been growing since October.
As of Thursday, it stood at a three-year high of 57.5%.
Alex Gilbert is a DeFi correspondent News. Got a tip? Email at [email protected].
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