Sarson Funds Sep 25 . 2 min read

Hedge Fund: Buy Before Bitcoin’s Big Day on Jan 2nd.

Bitcoin reached bottom in December 2018 at $3150. Starting January 2, 2019, a wave of Wall Street money will prime the next cryptocurrency revival.

Hedge fund managers posses unique insight, into emerging client sentiment and into capital flows that are not yet printed. As a manager of cryptocurrencies with multiple digital asset offerings, we consider orderbook information a key component of our strategies. Firsthand observations of these cryptocurrency orders over time supports our conclusion that Bitcoin’s December 2018 price of $3150 is the ultimate low.

Bitcoin’s 83% selloff sparked renewed investment interest in digital assets. Most other hedge funds would agree (though they might not tell you), that a substantial number of institutional and high net worth prospects have reengaged and have committed capital to cryptocurrencies. If November’s crypto price plunge sparked the renewed interest, late December’s price stability helped solidify the asset class’s revival appeal.

There are over 900 cryptocurrency hedge funds worldwide with nearly 650 of those right here in the United States. At our funds, new limited partners who entered in November or December have been holding their investments until January 2nd. Why the wait? The are two reasons:

  1. Few investors want an extra K1 form for just one month of management, and

  2. Market stability had not yet manifested by December 1st, the cut off for most funds to take on new investments. As such, most cryptocurrency managers suggested that clients wait and come in on January 2nd.

On January 2nd, banks will re-open and hedge funds holding on to new deposits will be clear to wire deposits to cryptocurrency exchanges. We expect this influx of orders to be more than enough buying power to cause a massive surge in price – one that we expect to intensify throughout the week as managers scramble into Bitcoin looking for “crypto-beta” as Bitcoin starts moving.

We believe that the minor strength seen recently in the market reflects pockets of “nimble” investors taking positions before this institutional money gets deployed.

Bitcoin’s general rise in price since December 15th is evidence that buying pressure has already outstripped supply. For investors who can, we recommend taking cryptocurrency positions before this flurry of purchases leaves the slow-moving with higher prices to pay.

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