Hedge Fund Expert: Bitfinex Hack Shouldn't Deter Big Investors


Hedge Fund Expert: Bitfinex Hack Shouldn't Deter Big Investors

Following the devastating breach at Bitfinex, the CEOs of Vanda Securities and BitX sat down with CNBC for an interview. They both agreed that there is nothing wrong with bitcoin.

Also read: Forex Expert: Bitcoin Should Be Taken More Seriously

Vanda Securities CEO Would Personally Invest in Bitcoin Even After Bitfinex Hack

Jason Ambrose
Jason Ambrose

Jason Ambrose is the CEO of Singapore-based Vanda Securities, an independent research house that provides tactical macroeconomic and investment strategy analysis to institutional investors and hedge fund managers. Formerly Head of Equity Trading at Ferox Capital LLP, Ambrose was previously an equity trader at Merill Lynch and JP Morgan before serving as a managing director at Morgan Stanley.

After discussing the breach at Bitfinex, when asked whether he would personally trade bitcoin, he answered without hesitation, “Personally, I would.” On the other hand, he added that he would not recommend bitcoin to his institutional clients simply because “we don’t see the interest there yet.” However, he also said that the interest “will come” in the future.

“It’s [bitcoin] like an emerging market. This is a new product. This is a new currency. It comes with inherent risk,” Ambrose told CNBC. “There is nothing wrong with the product. It’s just that, if you leave it in a bad place, it can be stolen.”

BitX CEO Sees Interest From Institutional Investors Now

Marcus Swanepoel
Marcus Swanepoel

Marcus Swanepoel, CEO of bitcoin exchange and wallet service BitX, revealed to CNBC that his company had seen interest from institutional investors over the past 2 to 3 months. He reported that he has worked with hedge funds and private wealth managers to put some assets into bitcoin.

While he agreed with Ambrose that, for institutional investors, “we are not there yet,” Swanepoel also said that, in 6 to 9 months, he expected institutional investors to be in a very different position when it came to bitcoin.

Ambrose disagreed on the time frame, stating his belief that institutional interest in bitcoin is “quite a bit further” away then Swanepoel’s prediction.

However, both Swanepoel and Ambrose agreed that there is nothing wrong with bitcoin itself, even after the Bitfinex hack.

“More than often the issue is not about bitcoin,” Swanepoel noted, “but about the people who provide services around bitcoin.”

Correlation Between Bitcoin and Global Risks

Ambrose claimed that the key reason it would take longer than 6-9 months for institutional investors to get serious investing in bitcoin was that “there is no correlation between bitcoin and global risks,” yet. He cited many factors that would slow down investing in bitcoin on the institutional level, including security, volatility, assets availability and exchange liquidity.

Politely disagreeing with Ambrose, Swanepoel said institutional investors were already interested in bitcoin because it is uncorrelated to other assets, among other reasons.

Based on his experience working with institutional investors, he said:

“[Institutional interest] is predominantly driven by data that has come out to show that it [bitcoin] is a very uncorrelated asset, and it has also been one of the best-performing assets compared to other currencies and commodities.”

Regardless of when institutional players will start seriously investing in bitcoin, whether it be 6 to 9 months or longer, both experts agree that bitcoin was not to blame for the hack at Bitfinex. Factors that will influence institutional investing in bitcoin are based on fundamental factors such as the demand to hold bitcoin as an uncorrelated asset in portfolios.

Do you think institutional investors will be deterred from investing in bitcoin following the Bitfinex hack? Let us know in the comment section below.

Tags in this story
asset manager, BitFinex, BitX, cnbc, hedge fund

Images courtesy of Forbes, LinkedIn.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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