Former IMF Economist Closes Year-Old Bitcoin Short as Crypto Prices Start Recovering

Francisco Memoria

Mark Dow, a former economist at the International Monetary Fund (IMF) who manages a family office in the US, has recently closed a bitcoin short he opened back when bitcoin futures started trading late last year, when the cryptocurrency was at its all-time high near $20,000.

On Twitter, Dow revealed he’s done with the bet against bitcoin, and that in the future he doesn’t plan on taking a long or short position.

When contacted by Bloomberg Dow added that he’s “done” with it and doesn’t “want to try to ride this thing to zero.” Per his words, he isn’t looking “to squeeze more out of the lemon,” and doesn’t want to think more about it – it just felt “like the right time.”

Dow further revealed that throughout the year he took profits twice, before closing his position. Since he opened it, bitcoin dropped from its all-time high to a little under $3,200 before starting to recover.

Using Dow’s tweet as a reference, he closed his short position as bitcoin rose to about $3,500. At press time, the cryptocurrency has already risen another 9.4% in the last 24-hour period, meaning it’s trading at $3,850.

Dow's short position

Referring to last year’s bull run, which saw BTC go from about $1,000 to its all-time high, he noted many don’t understand its underlying blockchain technology, but merely “saw it was going up and wanted a piece of it.” He added that people’s imaginations can go wild when they “don’t understand the issue,” and that this allowed “the bubble to be much larger and much more violent.”

He added that he saw the psychological hallmarks of what was going on, and realized a point came in which it “looked like the fever was breaking.” This year, regulatory setbacks and the BCH hard fork pressured the crypto’s price further.

Dow added:

People buy into these assets because they believe the narrative, and you look at the asset prices to see if the narrative is weakening or changing. It’s not easy -- you could be wrong, but that’s the sign you look for. But it doesn’t mean you’ll get it right.

Notably, Dow’s short was closed as some analysts start pointing out now may be a good time to buy crypto. As covered, Spencer Bogart, a partner at the crypto-focused venture capital firm Blockchain Capital, has recently said this may be a “great buying opportunity.”

Ripple CEO: 'You Don’t Want to Use BTC at Starbucks'

On Thursday (January 23), Brad Garlinghouse, the CEO of Ripple, told the Wallet Street Journal (WSJ) that Bitcoin is not a good means of payment because BTC transactions take too long.

The Ripple CEO's comments were made during his talk with Phillipa Leighton-Jones (Editorial Director for Innovation) at a Ripple-sponsored event (organized by the WSJ) called "Ripple Panel: Changing the Finance Industry From Within" held alongside this year's World Economic Forum Meeting in Davos, Switzerland.

Although we don't yet have a full transcript of this interview, we do know about two of the things he talked about thanks to tweets by Asheesh Birla, SVP of Product at Ripple, who was at this event.

First, it seems that although the Ripple CEO likes Bitcoin as a store of value, he does not see (at least, as of now) as a viable means of payment. The example he gave was paying for a cup of coffee at Starbucks. He believes that BTC transactions take so long to confirm that by the time you have finished paying for your coffee, "it'll be cold." 

Second, within the next 12 months, he sees several companies in the crypto space holding initial public offerings (IPOs) and he wants Ripple to be "on the leading side" since this is "a natural evolution" for Ripple, which raised $200 million via a Series C funding round (which valued the company at $10 billion) last month. 

On Wednesday (January 22), Ripple published the "Q4 2019 XRP Markets Report", which is a quarterly report that allows Ripple to "voluntarily provide transparency and regular updates on the company’s views on the state of the XRP market, including quarterly programmatic and institutional sales updates, relevant XRP-related announcements such as Xpring and RippleNet partnerships and commentary on previous quarter market developments." 

In Q4 2019, Ripple's total XRP sales were down just over 80% compared to the preceding quarter ($13.08 million vs. $66.24 million). Ripple "continued the pause of programmatic sales" (to crypto exchanges), and focused exclusively on over-the-counter (OTC) sales to "a few strategic partners, who are building XRP utility and liquidity in strategic regions including EMEA and Asia."

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