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Hedge Clippings | Friday, 28 May 2021
Crypto goes mainstream - and to the footy!
Last week's Hedge Clippings stated that Crypto is here to stay, irrespective of the recent volatility in the sector, or Warren Buffett's disbelief and disdain for the sector. This week that view has been reinforced with an article in financefeeds.com regarding the release of a research paper by Mathew McDermott, global head of digital assets at Goldman Sachs no less, that they now consider Cryptocurrencies to be an "investable asset".
Without being overly cynical, Goldmans are well known for being at the forefront when it comes to investment banking trends - particularly if it helps their bottom line - and they'd no doubt like to keep it that way. But it does reinforce the fact that the level of interest in this emerging sector is sky high, particularly as two AFL clubs have announced sponsorship deals with crypto exchanges - the Melbourne Demons (CoinJar) and the Western Bulldogs (CoinSpot).
Again the cynics might recall that the Sydney Swans were once backed (actually owned) by medical entrepreneur Geoffrey Edelsten, before being sold back to the AFL back in 1988 for the princely sum of $10, but that probably goes to show that the key to any trade is in the timing.
But we digress. Goldman's McDermott was quoted as saying discussions with institutional clients are revolving "around how they can learn more on the topic and get access to the space - as opposed to questions around what Bitcoin or cryptocurrencies are - which was the main topic just a few years ago."
What has become clear is that while all coins are potentially hugely lucrative, they are equally hugely volatile, and therefore risky. So when investment banks' trading desks, institutions and hedge funds show interest, it is not just to take a punt, but to work out how these markets work such that they can use their knowledge of trading and financial instruments to make attractive returns, with limited risk.
This week we were fortunate to be able to sit in on a presentation by Clint Maddock and Mike Gilbert, co-founders of the Digital Assets Fund, to a group of private investors (interestingly none by our estimation under 50 years old), while he explained the complexities of the market, and how utilising high frequency trading across carefully selected coins and exchanges offers the opportunity to take the directional risk out of crypto trading, while retaining the potential for attractive returns.
To learn more, and hear more from Clint as he discusses the sector, register for our Crypto Currency Webinar to be held next Thursday, June 3rd at 4:30 PM.
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