Morgan Creek Capital Management Founder, CEO, and Chief Investment Officer Mark Yusko’s recent comments on Bitcoin provide an interesting perspective on the current state of the market. He compares the experience of investing in Bitcoin to a rollercoaster ride, and explains the ups and downs that investors face. Yusko notes that Bitcoin has been stuck in a volatile pattern since late February, rising and falling but ultimately staying within a range.
In a conversation with Scott Melker, he said: “You could look at the chart and say, ‘Oh yeah, this is just a normal consolidation pattern, we’re in a range between 50,000 and 75,000, and we’re just preparing for the next big attack.'”
He worries that this pattern could be more than just a temporary consolidation. He notes that Bitcoin has recently made three lower highs and three lower lows, which could point to a distributional pattern, a sign that the market may be preparing for a downtrend. Yusko stresses the importance of Bitcoin breaking through some key levels in its next rally; if it fails to do so, that could be a worrying signal.
Yusko also candidly addressed the role of institutional investors in the Bitcoin market. He points out that while some large institutions appear to have significant Bitcoin positions, they may also be hedging these positions with equivalent short positions in Bitcoin futures. This neutral net position means that their involvement may not be as bullish as it first appears.
He further refers to a statement by Leo Melamed, who runs the CME (Chicago Mercantile Exchange). Melamed once said that they would “tame” Bitcoin, which Yusko interprets as an attempt by traditional financial institutions to control and possibly suppress the growth of Bitcoin through the use of futures contracts.
