This Hedge Fund Manager Says “Crypto Is Uninvestable”
Web3 and cryptocurrencies represent true innovation and will transform the global economy, but pension funds, endowments and other institutions are unlikely to be able to profit from the sector.
That’s the view of hedge fund manager Jordi Visser, who is president and CIO of Weiss Multi-Strategy Advisers. He is adamant that FTX’s fall is a good thing in the long run, mainly because it provided a visceral warning to serious investors.
Although the focus has been on investors’ failure to do due diligence on crypto exchange FTX, Visser says Web3 companies are simply rising too fast — and then falling — for investors earn money. It’s a lesson that many investors should have learned from tech companies in general. Uber, for example, is below the price at which it went public. Those who made money in the business were the first investors who were able to exit at the price of the IPO, he said.
Crypto presents even tougher hurdles to get around. “Investing in Web3 and thinking you can choose companies? It will not arrive. It’s a different investment world,” Visser said. The narrow window between early-stage and late-stage crypto firms is the result of intense competition.
In 2013, there were seven cryptocurrencies. There are now 21,000, with 9,300 of them active, according to Weiss’ research. “Think of them as businesses. Their tokens are basically the price of their shares,” Visser said. “We had an expansion, but they are all in competition with each other,” he added.
Visser thinks investors should choose to put their money in Bitcoin and Ethereum, which will continue to dominate. “These others will be very small, hundreds of thousands of them. And there is no other way to invest in them than to put money [into] the biggest cryptocurrencies. He added that the question of how early investments in crypto can be monetized “will cripple how people invest in this space.”
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