No, Investor Paul Tudor Jones Is Not “Buying Bitcoin”, Here’s What’s Wrong With That?

By Dalmas Ngetich
Published May 8, 2020 Updated May 8, 2020
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No, Investor Paul Tudor Jones Is Not “Buying Bitcoin”, Here’s What’s Wrong With That?

By Dalmas Ngetich
Published May 8, 2020 Updated May 8, 2020

Paul Tudor Jones is a billionaire hedge fund manager. As he is geared for profit maximization, news that he is buying Bitcoin has hit mainstream media while his real interest is in Bitcoin futures which is a very different investment altogether. 

So OTC, Spot, Derivatives, What’s The Difference After All?

Bitcoin draws value from its scarcity and qualifies as a store of value, a medium of exchange, and a unit of account divisible to eight decimal places. Only that miners will shut you out for any amount beyond five decimal points.

  • SPOT

Bitcoin can be acquired either through spot exchanges where one has to register and buy through a centralized ramp as Binance, Coinbase, or even Bitfinex, through a decentralized exchange, or through over-the-counter (OTC) exchange.

Trading via the former means amounts can be tracked since exchange’s order books are public and can be monitored. The larger the amounts, the more the buy or sell walls and the more the FOMO or JOMO.

  • OTC

On the contrary, OTC exchanges can be private and exchange rates negotiated to compensate for slippage. Purchases through these media are private as well and there are tons of providers.

Here, it is common for BTC to be bought in bulk without the worry big purchases will affect prevailing exchange rates subsequently affecting the amount bought or sold.

In Paul’s case, however, investors prefer his fund to purchase Bitcoin futures.

  • Futures/derivatives

These are derivatives where contracts, not individual coins, are traded.

In this arrangement, his fund while not holding physical coins through a vetted custodian, will bet on BTC prices and profit (or make losses) depending on their prognosis.

Assuming Tudor BVI makes pours one percent of their $38 billion into Bitcoin Futures, $380 million will be poured into the ecosystem, a significant boost for buyers if bids are made, or insurmountable pressure if bets are negative, and the coin’s overall liquidity. It is not clear whether Tudor BVI has already made purchases.

Bitcoin is the Fastest Horse and Hedge Funds may Follow Paul’s Move

Tudor BVI’s forays into the crypto and Bitcoin world is net positive and could lead to other hedge funds assigning part of their multi-billion funds to Bitcoin and another promising crypto with rewarding results.

Already, Paul admits that crypto is this era’s fastest horse and his bet is on Bitcoin, a digital asset which now competes with gold as a safe haven.

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Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Dalmas Ngetich
335 Articles
Dalmas is a very active cryptocurrency content creator and highly regarded technical analyst. He’s passionate about blockchain technology and the futuristic potential of cryptocurrencies and enjoys the opportunity to help educate bitcoin enthusiasts through his writing insights and coin price chart analysis. Follow him at @dalmas_ngetich

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