The co-founder and chairman of crypto-focused hedge fund Three Arrows Capital, Kyle Davies, believes that there will not be a repeat of the 2017 bull market in the current market cycle.
In a new video, Davies says that Bitcoin and altcoins are in a supercycle, while warning that the crypto markets will still see significant corrections.
“With a supercycle… there’s still volatility right. I mean especially for Bitcoin it’s a fixed-supply asset…
That doesn’t mean we go into a four-year bear [market]. It just means that we correct and okay… now we’ve corrected, now let’s keep going, right. There’s no more false selling beyond this basically is the thinking.”
The Three Arrows Capital chairman explains that the fall in the price of Bitcoin by nearly 50% from its all-time high recently was driven by negative news such as the crackdown on miners in China rather than traders being overleveraged.
“This pullback was harsh… It was not because we were over-leveraged…
It was pretty big news like China trying to actively shut down hash power, which they have started to do – not everywhere in the country. In Xinjiang, for example, like everyone’s shutting off their miners. Chinese miners are going to other locations to set up you know backups. Sichuan hasn’t happened yet, but may very well in the next 36 months.”
Davies adds that Three Arrows Capital benefited from the correction as the firm took a short position in Bitcoin and this is why the hedge fund is the most profitable entity on the FTX cryptocurrency exchange currently.
“Fact of the matter is we also did have a big Bitcoin hedge and we did make a lot of money on that and that’s why we’re you know… with the other basis traders they may be in the middle of the FTX leaderboard right now. That’s why we’re number one. Because we leaned into that market a little bit more.”
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