Hedge Fund Legend Says Crypto Acts Like a Risk On Asset

Billionaire quant investor and AQR Capital Management founder Cliff Asness recently threw cold water on the popular narrative that cryptocurrencies serve as a reliable “safe haven” or digital gold.

Instead, the hedge fund veteran argues that crypto is currently trading much like a standard tech stock.

According to Asness, the current chart correlations between the S&P 500 futures and Bitcoin show that when the broader stock market takes a hit, crypto is going down right alongside it.

“Just that today crypto does not look like a store of value / diversifying asset, it looks like risk on (as it has recently but not always),” he said.

A long-time critic

Asness fundamentally views Bitcoin as an “imaginary asset” and regularly mocks the idea that a purely digital currency could ever be worth the aggregate value of all other assets on Earth.

He firmly rejects the narrative pushed by maximalists that Bitcoin is the primary driver of the broader stock market, viewing it instead as just another highly volatile asset.

He has also attacked the concept of “Bitcoin yield”, a metric popularized by MicroStrategy’s Michael Saylor to track the ratio of BTC holdings to outstanding shares, arguing that it represents neither true yield nor total return.

His disdain for the metric is visceral, joking that every time the term is used, “an angel gets their wings violently ripped off.”

Despite strongly disliking Bitcoin, his harshest criticisms are actually directed at Michael Saylor’s corporate strategy and the massive premium MicroStrategy trades at.

He views MicroStrategy functioning essentially as a 2x Net Asset Value closed-end Bitcoin fund as “moronic” and a glaring failure of market efficiency.