Chinese institutional investors bought ETH at $850, hoping to balance through ICO
“Bitcoin is Gambling, a Game, Not an Investment” said Warren Buffett.
Munger’s comment on bitcoin, “freshly harvested baby brains”, was even more controversial among Chinese coin-holders.
Despite the bashing from heavyweight investors, more institutional investors are joining the game due to the money-making effect in cryptocurrency market.
Zhao Gang, director of a cryptocurrency investment fund in China, was happy to see the increase of “jiucai”, nickname for cryptocurrency rookies, when BTC price approached 10,000 USD again.
However, as the effect of making money from encrypted digital currency suddenly emerged, institutional investors willing to participate in gambling increased.
“At first, traders who were originally worked in Wall Street hedge fund started to set up fund products to speculate on Bitcoin. Now many venture capital funds have joined in the game.”
Zhao Gang said. Recently, he heard that a venture capital fund even used one third of its assets to buy ETH at around 850 US dollars at the end of last year. So far he did not even know if the fund has acquired permission from most LP to invest so much money in cryptocurrency.
Currently, the return of different investment strategies is very different. Institutional investors that are chasing short-term high returns have found themselves in dire situation. For example, the price of the Ethereum dropped more than US$100 this year. The above-mentioned VC funds experienced 15% drawback. The fund manager has to grab investment ratios for ICO projects (with certain practical application scenarios and technical background), expecting these projects to grow and boost the funds overall performance.
“I was planning to retrieve my original investment and then quit the market. But I heard that recent institutional investors such as Goldman Sachs are also planning to enter the market. So I intend to hold coins longer and maybe we can reap the unexpected wealth.”
An investor who bought ETH last year told reporters. Chinese investors have to face the shortage of high-yield financial instruments. He prefers to “gamble”: either further drawback if cryptocurrency dives or grabbing profits from institutional investor. Then maybe there is a chance to see profit doubles in a short time.
The reporter learned that many individual investors who share similar thoughts. They also learned that because they are also aware of the mystery of the investment in encrypted digital currency investment, it is as far as possible a drum-passing wealth transfer game – as long as new funds continue to enter the market. They are not afraid of finding high-priced dealers.
“Actually, most of the new institutional investors who have entered the market this year are using money from individual investors.”
an ICO investment manager told reporter. In order to maintain the money-making effect of cryptocurrency, many ICO investment proejcts have entered into the market value management business. Funding institutions that are based on offshore financial centers such as the Cayman Islands, Malta, Seychelles, are selling products to individuals. Then they join hands with digital currency exchanges to manipulate price movement of cryptocurrencies, attracting unsuspecting new investors to enter the market and then reaping them off.
Zhao Gang bluntly pointed out that this is one of the main reasons for the recent increase in the number of institutional investors engaged in cryptocurrency. However, such institutional investors are often reaped off by “bigger market-makers” – such as the runaway of ICO project, which compels those institutional investors to pursue the head of ICO projects. However, once they have recovered the compensation, the corresponding funds would enter the fund manager’s own pocket. Eventually, the real funders are likely to lose everything.