- Michael Wang is the founder and CEO of different investments platform Prometheus.
- The exec broke down how bitcoin didn’t reside as much as its billing as an inflation hedge.
- Wang additionally laid out why bitcoin and ether stay high crypto choices for retail traders.
“The world is transferring in direction of extra transparency,” says Michael Wang, a former senior analyst at Steven Cohen’s now-defunct hedge fund SAC Capital.
The 15-year capital markets vet, who later labored for a now-shuttered hedge fund Tourbillon Capital Companions, advised Insider that Wall Avenue has a transparency drawback. However Wang says his Los Angeles-based fintech startup is making strides to repair this.
His new enterprise, Prometheus, is another funds market coupled with a social community. It facilitates funding in hedge funds, venture-capital funds, and crypto funds — regardless of the latter not being particularly recognized for its transparency.
Wang says to think about the platform as a pseudo-LinkedIn for individuals who need publicity to greater than what Robinhood and Coinbase has to supply them. The transparency drawback throughout the numerous funds listed above, Wang talked about, might be remedied with a extra environment friendly and quicker avenue to speak with traders.
“Take into consideration what number of docs, attorneys, entrepreneurs, and engineers which have most likely near 0% of their belongings in hedge funds, enterprise funds, and personal fairness funds,” Wang mentioned. “We wish to change that.”
Bitcoin’s questionable reptuation as a safe-haven asset
Given how Prometheus permits customers to put money into crypto funds, Wang has been watching the house as its seen widespread losses over the previous a number of months. For context, each bitcoin and ether — the 2 most dominant cryptos traditionally — have misplaced greater than 50% since latest highs in late 2021.
There’s additionally been wreckage in altcoins, maybe none extra extreme than in USDTerra and its sister coin LUNA. Solana is down 83% from its report excessive amid sporadic outages on its community.
The truth that this has all occurred at a time when the US is seeing the highest inflation in 40 years has dispelled the previously common concept that bitcoin may function a hedge in opposition to larger client costs. As an alternative, bitcoin, and crypto at massive, has functioned extra like a standard danger asset.
That explains why crypto costs have declined alongside shares for the higher a part of 2022, in response to the Federal Reserve’s financial tightening efforts, that are supposed to chill inflation and head off an overheating financial system. With the central financial institution set to announce vital price hikes at their subsequent two conferences, the primary headwind for each crypto and fairness traders appears to be like more likely to persist.
Wang, who was named Institutional Investor’s 2016 Hedge Fund Rising Star, mentioned crypto markets are extremely correlated with the broader fairness market, and agreed with the narrative that bitcoin has failed as an inflation hedge. However that interrelatedness is simply the beginning: Wang notes that bitcoin has a “a lot larger beta” than shares, making it extra inclined to sharp draw back swings.
For indicators of what is to come back within the crypto market, Wang — like most inventory traders — is central financial institution exercise.
“What supersedes something for any asset class and asset value whether or not it is crypto, shares, or actual property is what the Fed does,” Wang mentioned.
What to purchase amid crypto wreckage
Wang predicts that the majority cryptocurrencies aren’t going to “survive” long run aside from “most likely” bitcoin and ethereum. The 2 have amassed massive market caps and have garnered sufficient mainstream adoption to resist bearish markets.
“Your litmus take a look at right here for some shares and cryptos is that if it isn’t going bankrupt, you are most likely going to generate income holding it for a 12 months,” Wang mentioned.
Bitcoin, particularly, will proceed to achieve traction as a borderless fee technique, permitting customers to bypass remittance charges and gradual transaction instances.
“Many elements of the world are nonetheless unbankable,” he mentioned. “Blockchain can be utilized as an answer in serving to folks in these areas.”