David Einhorn, Chairman of Greenlight Capital, speaks at the 14th CNBC Delivery Alpha Investor Summit in New York City on November 13, 2024.
Adam Jeffery | cnbc
David Einhorn of Greenlight Capital believes that speculative behavior in the current bull market has escalated to levels beyond common sense.
“We have reached the ‘fartcoin’ phase of the market cycle,” Einhorn wrote in an investor letter obtained by CNBC. “Apart from trading and speculation, it serves no other obvious purpose and meets no need that is not met elsewhere.”
A crypto token called “Fartcoin” exploded in popularity during the recent election. donald trump Brought a storm of animal spirits on Main Street. The meme coin is now heading towards a market cap of $2 billion, surpassing many US-listed companies.
More meme coins have emerged since the introduction of Fartcoin. trump launched $TRUMP, a meme coin built on the Solana platform. Its market cap climbed over the weekend last 14 billion dollarsThe coin was down more than 20% at one point in the last 24 hours, but has since pared its losses to about 3%. Trump’s wife Melania also Unveiled Coin.
“Nothing can stop the launch of many more tradable coins,” Einhorn said. “Perhaps we are leaving the fartcoin phase of the market and entering the Trump (and Melania) memecoin phase. It’s anyone’s guess what will happen next, but it looks like it’s going to be wild.”
Einhorn’s letter comes as investors are lifting equities, boosted by expectations of lower taxes and regulation from a second Trump administration. Tuesday, the day after the inauguration Dow Jones Industrial Average Scored more than 400 points. S&P 500 And nasdaq composite climbed 0.8% and 0.7%, respectively.
Shorting the Leveraged Bitcoin ETF
Greenlight took advantage of the crypto frenzy by betting against some popular exchange-traded funds indirectly linked to Bitcoin during the fourth quarter.
The two funds the company focused on were the T-Rex 2X Long MSTR Daily Target ETF (MSTU) and the Defiance Daily Target 2X Long MSTR ETF (MSTX). Those funds use derivatives to achieve double the daily returns micro strategy, A software company that has transformed itself into a Bitcoin treasury vehicle in recent years.
Funds have at times struggled to achieve that goal due to the volatility of microstrategies and the short supply of the most easily used derivatives to achieve leveraged returns.
The letter said Greenlight took short positions against those funds during the quarter, which was partially offset by owning MicroStrategy stock in an arbitrage trade that was a “material winner.”