The one-time manager of Fortress Investment Group’s flagship macro fund, Mike Novogratz, has strong believes that crypto currencies will gain their stable position on financial market back. The crypto currencies volatility is very attractive, still this may happen to be a trap, as per Mike.
The S&P 500 Index stocks volatility is extremely high and this month it is about to set a record low.
Nevertheless, crypto currencies are considered to be a perfect antidote. Since the beginning of the year the Bitcoin has risen its value 4 times. The same Novogratz, as per Bloomberg, claims to have made a fortune on crypto currencies trading, and has an intention to invest into crypto currencies` related companies.
Anyway, this strategy is not the perfect one and suffers some deficiencies. Who may suffer most will be the novices, and they cannot be better market-timers than others with more experience. In 2015, Fortress’s macro fund was shorting the Swiss franc only to see the currency rocket when suddenly the central bank abandoned its peg to the euro. The resulting losses helped lead to the closure of Mike`s fund and led to his retirement from Fortress.
Though crypto currencies do not depend on central banks, this yet does not decrease their volatility. Exchanges have suffered hack attacks, which provoke huge losses. A number of offerings of new digital coin has grown to more than $1.5 billion this year so far.
Financial market, according to Mike Novogratz, can be compared with a big bubble. And as all know, there is a sucker in any bubble. Potential investors should be asking if that sucker is likely to be Novogratz, or themselves.