Fund manager, Ken Griffin, has never been a Bitcoin fan. Back in December, when prices had just hit $11k, he called it a bubble. Since we’re sitting around the $7,500 mark as of this writing, I’m not sure he gets a lot of credit for that. There was certainly a needed correction, and a bubble of sorts. The problem is, that does’t seem to be what he meant.
In his latest attack, he calls cryptocurrency, “a solution in search of a problem”, and then blasts 27-year-olds for wasting their money investing in magic Internet money instead of solid companies.
When I hear someone like Warren Buffet say this, I get it. Buffet has never been a tech investor. He missed out on Google, never believed much in Amazon, and in general never liked Internet stocks. And that’s cool; invest in what you know, and he knows the world needs staples like toilet paper and other packaged goods. But looking at what Griffin says, I find a tinge of snark and feel he’s just overall disingenuous about his position.
He claims that he has never had a portfolio manager advice him they should invest into crypto. I find that highly suspicious. I would go so far as to say if they haven’t, he’s only employing people who conform to his way of thinking. He can try to argue the future, but it’s difficult to re-write the past. And in 2017, BTC went from $900 to nearly $20,000. And even if we want to account for this massive bubble he predicted, that’s $900 to $7,500 today. If Griffin has given his clients better returns than that, then I’ll just shut up right here. But he hasn’t.
According to CNBC, Griffin’s firm, Citadel, is up 8.79%, in a market where just about everyone is up. Let’s face it, when you have an administration that cuts taxes for corporations, and swats down regulations like flies, it’s a pretty easy market to make money. Everyone is up. Last year he was up 13%, which is great, but not compared to those of us holding crypto.
“What’s unfortunate is the amount of hype and the number of early investors who have been caught up in this hype. I wish the 27-year-old wasn’t buying Bitcoin. I wish they were investing in the companies that define the future of our country, and pushing capital to create jobs, create innovation, and grow our economy.”
Since Griffin has no problem bringing age into this, let’s take a look at the fact he’s a 49-year-old billionaire. I’m doubtful he spends a lot of time in front of a computer for anything other than his job. This could be why he says foolish things like blockchain is very well the future, but not cryptocurrency. This just tells me he doesn’t understand how Cryptocurrency, or blockchain works.
His biggest issue seems to be in the idea that cryptocurrency is competing with fiat currency. This is again a sign of being lost in the idea. Bitcoin doesn’t need to compete with the U.S. dollar anymore than Paypal does. At its core, it’s a money distribution system. It’s a global currency for expedient, low fee (hopefully), transactions, and either party can then convert their BTC into the fiat currency of their choice.
“What people don’t understand with cryptocurrencies vs for example, the US dollar, is that you have to use US dollars to pay your taxes at the end of the year. You don’t have a choice. There’s no need for cryptocurrencies.”
What Griffin doesn’t understand is that we do need a global currency. And, that many of these cryptocurrencies are based in blockchain technology that will power the next form of the Internet. To bet against something like Ethereum is to pretty much bet against blockchain itself.
A couple days after he said this, Coinbase announced they snagged $20 billion in institutional investments. A former JP Morgan exec said banks have lost out to cryptocurrency. And, the country of Costa Rica has approved the use of cryptocurrency to pay employees. In other words, the future moves forward with, or without, Ken Griffin’s approval. And when that upswing kicks in again for crypto, as it does at the end of every year since it’s inception, we’ll see how his investors feel when other funds are touting those returns.