Greenlight Capital President David Einhorn speaks at the 14th CNBC Delivery Alpha Investor Summit on November 13, 2024 in New York City.
Adam Jeffery | CNBC
David Einhorn of Greenlight Capital believes that speculation in the current bull market has risen to a level that exceeds common sense.
“We have reached the ‘Fartcoin’ phase of the market cycle,” Einhorn wrote in an investor letter obtained by CNBC. “It has no other obvious purpose and serves no other purpose than trading and speculation. needs that cannot be met locally.”
As Donald Trump’s re-election unleashes a storm of animal spirits on the streets, a cryptocurrency called “fartcoin” is rapidly gaining popularity. The meme coin’s market capitalization is currently approaching $2 billion, surpassing many U.S. listed companies.
Since the inception of fart coins, many more meme coins have appeared. President Donald Trump roll out $TRUMP, a meme coin built on the Solana platform. Its market value climbed over the weekend Past $14 billion. The coin fell more than 20% at one point in the past 24 hours, but has since pared its losses to around 3%. Trump’s wife Melania also unveiling A coin.
“There’s nothing stopping the launch of more tradable tokens,” Einhorn said. “Maybe we are leaving the Fartcoin phase of the market and entering the Trump (and Melania) memecoin phase. Everyone is guessing what will happen next, but it will feel crazy.”
Einhorn’s letter comes as investors push stocks higher on expectations of tax cuts and loosening regulations under Trump’s second administration. Tuesday, the day after the inauguration, Dow Jones Industrial Average It rose more than 400 points. this S&P 500 Index and Nasdaq Index rose 0.8% and 0.7% respectively.
Short Leveraged Bitcoin ETFs
Greenlight took advantage of the crazy momentum in cryptocurrencies in the fourth quarter by shorting a number of popular ETFs indirectly tied to Bitcoin.
The two funds the company focuses on are T-Rex 2X Long MSTR Daily Target ETF (MSTU) and Defiance Daily Target 2X Long MSTR ETF (MSTX). These funds use derivatives to try to double daily returns microstrategy, In recent years, one software company has transformed itself into a Bitcoin funding vehicle.
These funds sometimes have difficulty achieving this goal due to MicroStrategy’s volatility and the small supply of derivatives that are most easily used to obtain leveraged returns.
Greenlight took a short position against these funds during the quarter, partially offsetting the impact of holding MicroStrategy stock in an arbitrage trade that was a “substantial winner,” the letter said.
