Cliff Asness, the co-founder of AQR Capital Management, expressed his belief that bitcoin is currently in a speculative bubble. This assessment comes after the cryptocurrency surged above $100,000 in the wake of the November presidential election. Asness shared his views on CNBC’s “Money Movers,” stating that he leans towards the side of caution regarding the bubble status of bitcoin. He emphasized that for him to reconsider his stance, there would need to be a clear use case for bitcoin beyond speculation and criminal activities.
According to Asness, he has identified three main uses for cryptocurrencies: speculation, utilization in conflict-ridden regions, and as a means of paying cyber ransoms. Bitcoin experienced a 120% rally in 2024, primarily driven by a surge following the election of President-elect Donald Trump. However, the digital currency has since dipped by 3% in the new year, currently trading around $90,000.
Asness highlighted the absence of a fundamental trend for cryptocurrencies due to the unclear nature of their fundamentals. He pointed out that while there may not be a fundamental trend, there is a noticeable price trend. Asness speculated that most trend followers likely have a long position on cryptocurrencies within their investment universe.
Despite his bearish outlook on cryptocurrencies, Asness mentioned that he would refrain from shorting them due to their high volatility. He expressed concerns about the risks associated with shorting assets that exhibit 100% annual volatility, emphasizing the potential impact of concentrated short positions on a portfolio.
In 1998, Asness co-founded AQR after working at Goldman Sachs. Together with his partners, they developed the firm’s investment philosophy during their time at the University of Chicago’s Ph.D. program, focusing on value and momentum strategies.
