'Very Difficult' to Call Bitcoin's Bottom Says Crypto Hedge Fund Manager

Alex Sunnarborg, the founding partner at Tetras Capital, a New York-based digital asset hedge fund with reportedly $30 million of assets under management (AUM), has argued that the prices of most major cryptocurrencies are still strongly correlated.

Sunnarborg, a finance graduate from the University of Florida, revealed that his firm, Tetras Capital, had shorted ether (ETH) in May 2018 - when the token was trading at around $500.

Confirming that it was his company’s “biggest win for 2018" (as ETH is now trading below $150), Sunnarborg told Forbes in an interview (published on February 19th) that cryptocurrencies “don’t have a good way to come to a fundamental value.”

Crypto Prices Still Strongly Correlated, No Way To Call Bottom 

He explained that there is no (reliable) way for him to tell if ETH is “fundamentally going to bottom at $50” as Ethereum’s native token was trading for only worth about $10 two years back.

Sunnarborg believes ether’s “short-term bottom would be in line with” bitcoin’s bottom and that if the flagship cryptocurrency “turned tomorrow and rallied”, then “ether would, too.”

According to the former research analyst at Coindesk, altcoins “generally will return more than bitcoin” in a bull market. He also shared his firm’s trading and investment strategy:

In a bear market, altcoins are still trading at a higher beta, but to the downside. In 2018, bitcoin fell about 75%, but altcoins fell 95%. [Their prices are still] strongly ... correlated, yet altcoins have a higher beta. Today, if we’re trying to hedge our exposure to this space, before we short bitcoin we look at something with a higher beta.

Millions Invested In Augur, But Only $40,000 At Stake Across All Its Markets

When questioned about whether the recent layoffs and downsizing by ConsenSys, the leading Ethereum-related development firm, is a “bad sign for the future of Ethereum”, Sunnarborg acknowledged that it could potentially slow things down - as “ConsenSys is an integral piece of the Ethereum ecosystem.” He also pointed out that there were tens of millions of dollars invested in creating Augur’s decentralized prediction markets. However, there’s only about “$40,000 of money at stake across all its prediction markets.”

This shows that there’s “this massive disconnect between how much money is still tied up in these projects and how much people actually use them”, Sunnarborg argued.

Bitcoin Surpasses $4,000 Mark After Six Weeks

When asked about whether he thinks “bitcoin has bottomed yet”, Sunnarborg remarked:

I don’t think so, [but] calling that is very difficult. … I’m [just] really thankful that we’re in the position we are right now. We can hedge ourselves, remain more neutral and not have to call that exact price or timing bottom. I’m not confident right now. Our portfolio is relatively neutral—we have cash and short positions.

Although cryptocurrency prices are down significantly from their all-time highs - when the total market cap of all digital assets exceeded $800 billion in early 2018, there have been some signs of the market starting to recover. On February 19th, bitcoin, the flagship cryptocurrency, surged past the $4,000 mark for the first time in six weeks.

The bitcoin price is also on track to record its first green monthly candle in six months.

Neutral Dollar Stablecoin Founder Explains How to Access Shared Liquidity Pools

Matthew Branton, the Founder and Chief Technology Officer at Neutral, a smart contract-enabled platform that provides various financial instruments for the cryptocurrency industry, has predicted that stablecoins will have “a tremendous impact on the future economy.”

Branton, a computer science graduate from Lafayette College, told CryptoGlobe that stablecoins offer “access to a digital currency that can enable payments, credit, and banking services which many people don't have access to.”

According to Branton:

[Stablecoins are] innovative digital assets [that] will help lower the barriers for [major financial] applications and [they will also] help people transact in value [systems] they are familiar with, such as the USD [and other fiat currencies.]

“Cultivating Healthy Dialogue to Help Build Wider Understanding” of Stablecoin Market

In response to a question about how the traditional financial system could be upgraded (in terms of both the regulatory framework and technological infrastructure) so that it can allow users to legally acquire stablecoins and other digital assets, Branton remarked:

In order to ensure that regulation evolves in tandem with advances in financial technology (FinTech), dialogue between regulators and innovators is essential. Cultivating a healthy dialogue among fintech project [developers], stakeholders and regulators of traditional finance will help build wider understanding of the benefits of stablecoins, and in turn accelerate the creation of regulation and infrastructure that accommodates stablecoins in the global economy.

Neutral Dollar Aims to Provide “Diversified Exposure” to Investors at “Lower Risk”

When asked what unique value proposition the Neutral Dollar stablecoin offers, which may not currently be available in the cryptoasset market, and how this is supposed to be relevant and useful, Branton said:

The Neutral dollar provides diversified exposure, presenting a lower risk alternative against other stablecoins (which contrary to their name, may not exhibit stability) in the market. In addition, the Neutral Dollar functions in a way that creates an additional layer that allows for shared liquidity amongst constituents stablecoins, a property that isn't inherent in their design. Given the fragmented and nascent nature of the crypto market structure right now, this solution is particularly relevant and unique in the marketplace.

Responding to a question about the potential impact he expects his company’s line of products to have on the cryptoasset market, Branton stated:

The impact of our products is to not only give end-users a better means to invest, trade, or hedge cryptoassets, but to also facilitate liquidity and engage in better portfolio management practices through our products. In order for the digital asset space to reach its full potential, the industry needs reliable financial instruments that take us beyond the limitations of fiat currencies, while also upholding the highest standards in stability and transparency. In the longer term, we plan to explore the launch of a suite of financial products to improve market infrastructure and activity.

Digital Asset Security Is “Quite Solid”

Commenting on how we can ensure the security of our assets, including stablecoins users might acquire, since the technology used to transact in these assets is highly technical, Branton noted:

Given that collateral is on-chain and smart contract based, security is decentralized in nature and quite solid. Asset safety is still the responsibility of the end-user — crypto-storage extends beyond the case of stablecoins and Neutral Dollar itself.

He added: “Ultimately, once a Neutral Dollar token is deployed on smart contract networks, it will function completely autonomously. The math and algorithms that govern its operation will operate independently of a centralized entity and in a transparent manner, and provide continuous services on the network.”