Bitcoin's Hedge Fund Sharks Are Swimming With the Whales
Cryptocurrencies are tempting Wall Street traders, but this is still a pretty bonkers market subject to the whims of a small band of big investors.
Quite a jump.
Photographer: Carl de Souza/AFP
Bitcoin is doing that thing again. After a 50% slump in the cryptocurrency’s price to about $4,000 in mid-March, when Covid-19 panic was gripping the financial markets, it has bounced back to trade at about $11,200. Veteran crypto-watchers have seen this rapid shift from fear to greed many times before, and they know it can have painful consequences.
The first time Bitcoin’s price went past five figures, in 2017, it fueled a speculative frenzy that ended almost as soon as it began, leading to an 80% slump over 12 months. And when Bitcoin rose above $10,000 in February this year, any hope for a rally was snuffed out by Covid. The subsequent mad rush to trade digital coins for cash was made worse by the fact that many people were using large amounts of debt to back their trading. Several crypto hedge funds closed.