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Billionaire admits he was wrong about Bitcoin as Citadel looks to crypto markets

March 2, 2022 Coin Telegraph

Citadel

Company founder Ken Griffin has backtracked on his anti-crypto stance and wants his firm to offer digital assets to its clients this year.

American multinational hedge fund and financial services company Citadel is poised to enter cryptocurrency markets this year.

Speaking on Bloomberg Wealth with David Rubenstein, Citadel founder Ken Griffin commented on the current state of markets in light of recent geopolitical conflicts stating that they are at a “very volatile inflection point.”

When the interview turned to digital assets, Griffin who has previously warned the younger generation away from them and said “there’s no need for cryptocurrencies,” revealed that the firm would be engaging in crypto asset markets this year.

“It’s fair to assume that over the months to come, you will see us engage in making markets in cryptocurrencies.”

Its quite the turnaround from November 2017, when Griffin said: “Bitcoin right now has many of the elements of the tulip bulb mania we saw back hundreds of years ago in Holland.” At the time, when BTC was trading around $10,000, he added “these bubbles tend to end in tears. And I worry about how this bubble might end.”

During the Bloomberg Wealth interview Griffin acknowledged that he was wrong to have been in the "naysayer camp" with regard to digital assets. “Crypto has been one of the great stories in finance over the course of the last 15 years,” he stated before adding:

“And I’ll be clear, I’ve been in the naysayer camp over that period of time. But the crypto market today has a market capitalization of about $2 trillion in round numbers, which tells you that I haven’t been right on this call.”

He said that he was still skeptical but “there are hundreds and millions of people in this world today who disagree with that.”

“To the extent that we’re trying to help institutions and investors solve their portfolio allocation problems, we have to give serious consideration to being a market maker in crypto.”

Citadel analyzes global markets employing a range of strategies to deliver market-leading investment returns to its capital partners. Griffin wants the firm to encompass crypto assets into these strategies over the coming months.

In January, Citadel Securities announced its first outside investment worth $1.15 billion from two prominent crypto venture capital firms Sequoia Capital and Paradigm. Citadel, which currently has around $38 billion in assets under management, was valued at $22 billion following the investments.

As recent as November, Griffin remained highly skeptical about cryptocurrencies stating at the time that people are focused on new ideas and that he worried “that some of this passion is misplaced when it comes to cryptocurrencies.”

The billionaire investor did go on to tout the properties of Ethereum, however, opining that assets based on Ethereum will eventually replace Bitcoin which has a greater environmental impact.

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CME Bitcoin futures open interest hits 8-month high, greater than when BTC price was at $65K

October 14, 2021 Coin Telegraph

Bitcoin

Open Interest surged to $3.22 billion Thursday to levels not seen since February.

Open interest (OI) for Bitcoin (BTC) Futures trading on the Chicago Mercantile Exchange (CME) inched toward a new record high Thursday as BTC reclaimed its five-month high of $58,550 on BitStamp.

The total number of outstanding derivatives contracts on CME Group's Bitcoin Futures market reached $3.22 billion, according to data provided by ByBt.com, just $40 million below its record high logged in Feb 2021. Nonetheless, the OI came out to be higher than it was at the Bitcoin price's peak in mid-April.

In detail, the Bitcoin Futures OI on CME was $3.02 billion on April 14, the day on which the BTC price—nearly reached $65,000. But on Thursday, the OI was more than 6% higher than the readings from mid-April, even as the BTC price wobbled inside the $57,000-$58,550 price range.

*CME Bitcoin Futures open interest. Source: ByBt.com*

Traders often use OI as an indicator to confirm trends in both derivatives and spot markets. For example, a rising number of outstanding derivatives contracts gets interpreted as new money coming into the market, irrespective of the bias.

Meanwhile, in the case of Bitcoin, a rising open interest in the futures market appears indicative of accredited investors' wanting to increase exposure to BTC.

Commercial sector increases Bitcoin Futures exposure

The latest OI readings suggest that more institutional capital is entering the Bitcoin market. As a result, investors have been looking more confident in opening new positions in the $50,000-$58,000 price range, with the CME volumes trending higher in the past seven days.

*Bitcoin futures — volume and open interest. Source: CME*

Analysts see a uniform rise across OI, volume, and price as signs of new buying in the futures market. That also puts the underlying asset in a better position to continue its uptrend. So it seems, Bitcoin is undergoing a similar upside trend.

Prime evidence for a bullish Bitcoin comes from the Commodity Futures Trading Commission's record released on Oct. 5. It notes that the commercial sector — which comprises corporate hedgers — have accelerated their Bitcoin Futures purchases; they now hold a net position of more than 10,000 BTC.

*CME BTC Futures exposure changes. Source: CFTC, Forbes*

At the same time, however, hedge funds and retail investors have emerged to be net short in the Bitcoin Futures market. Nevertheless, that could be their tactic to offset long positions elsewhere, such as in the spot market.

That is primarily due to a higher annualized premium available on CME Bitcoin Futures prices over spot markets. In recent days, CME Bitcoin futures price has been regularly trading 15% above BTC spot price, compared with around 7.7% on average in the first nine months of 2021.

*Bitcoin Futures premium against spot prices. Source: Skew*

Macro fundamentals behind Bitcoin resurgence

The latest bout of buying in the Bitcoin spot market also appeared in the wake of statements coming from U.S. regulators.

For instance, Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), and Jerome Powell, the chairman of the Federal Reserve, discouraged a ban on Bitcoin. Meanwhile, the increasing prospect of a Bitcoin ETF approval by the SEC has also fueled the "buy the rumor" narrative.

Investors also sought exposure in the Bitcoin market as consumer prices continued to soar in the U.S. According to the Labor Department, the Consumer Price Index (CPI) rose to 5.4% year-over-year in September for the first time in thirteen years.

Inflation came in at 5.4% for September, which is a 13 year high.

Bitcoin just crossed over $58,000 which is the highest price since May of this year.

Bitcoin continues to serve as the best inflation hedge in the world.
— Pomp (@APompliano) October 14, 2021

JP Morgan Chase noted in its recent report that higher inflation prompted institutional investors to seek exposure in Bitcoin, with some even seeing the cryptocurrency as a better haven asset than gold. In another report published in Jan 2021, the U.S. banking giant had anticipated the BTC price to reach $140,000 in the long term.

"A crowding out of gold as an ‘alternative’ currency implies big upside for Bitcoin over the long term," it had noted.

"A convergence in volatilities between Bitcoin and gold is unlikely to happen quickly and is in our mind a multiyear process. This implies that the above-$146,000 theoretical Bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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