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April 03, 2013, 12:48:36 AM |
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Folks, I can see only one rational explanation to that unstoppable rally all accross the board: we have managed to convince the street to add crypto to their portfolio, and what we see is instituational investors and hedge funds rushing through the Coinlab gate to buy Bitcoins, and hedging right away in Litecoins and other minor alts.
If that hypothesis is correct (and the more we are seeing literal millions being injected every day in the economy, the more it seems like the only possible explanation), we are in for an epic ride: funds have to provide transparency about their balance sheet to their investors, and this information is looked eagerly by all the competitors and compared to their own investments. When the whole financial sphere realizes that the investment with the highest (almost pure) alpha is crypto, no (let me stress it: NO) fund manager will be able to resist the urge to add that to their portfolio too. If a handful of funds have a significantly higher yield over risk ratio than others, they attract all the business to them, so it really is a question of life or death for other funds to mimic the success of the best in class, so as to at least be somehow pegged to their yield and not remain behind in the dust, and cover their ass against charges of blattant lack of insight. Yes, this is typical herding behavior, but it is well known in this sphere that innovation is led by a couple flagship funds, and the rest are flocking in droves on their trails. This is the reason why even bad ideas like subprimes go endemic: nobody can resist the urge of getting a higher yield, especially when more successful competitors do the same thing.
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