Hedge fund manager David Einhorn has criticized the new cryptocurrencies and memecoins that have been issued, saying that investors’ common sense has gone out the window.
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“We have reached the ‘Fartcoin’ stage of the market cycle,” Einhorn wrote in a letter to investors of his Greenlight Capital hedge fund. “Other than trading and speculation, it serves no other obvious purpose and fulfills no need that is not served elsewhere.”
Einhorn is referring to Fartcoin, a meme token that exploded in popularity as the re-election of Donald Trump unleashed a frenzy in the cryptocurrency market. Despite having no practical utility, Fartcoin currently has a market capitalization of nearly $2 billion, surpassing many small-cap stocks.
Memecoin Mania
In his letter to investors, Einhorn goes on to criticize the proliferation of memecoins that have emerged since the U.S. election held last November. In recent days U.S. President Donald Trump and his wife Melania each launched their own memecoins ahead of the presidential inauguration.
“Nothing stops the launch of many more tradable coins,” Einhorn wrote. “Perhaps we are leaving the Fartcoin stage of the market and entering the Trump (and Melania) memecoin stage. It’s anyone’s guess as to what will happen next, but it feels like it’s going to be wild.”
Crypto Peak
Einhorn’s letter comes as some analysts and investors speculate that a crypto bubble might burst now that Trump is back in the White House. Some market observers have referred to the Trump and Melania memecoins as a potential tipping point for the crypto industry.
Einhorn revealed that his hedge fund, Greenlight Capital, took advantage of the crypto frenzy during last year’s fourth quarter by shorting, or betting against, some popular spot Bitcoin (BTC) exchange-traded funds (ETFs). David Einhorn is a well-respected value investor. Top holdings in his hedge fund include Green Brick Partners (GRBK) and Kyndryl Holdings (KD).
However, Einhorn also revealed in his investor letter that he owns shares of serial Bitcoin acquirer MicroStrategy (MSTR).
Is BTC a Buy?
Most Wall Street firms don’t offer ratings or price targets on Bitcoin, so we’ll look at the cryptocurrency’s three-month performance instead. As one can see in the chart below, the price of BTC has risen 54.11% in the last 12 weeks.
