Last week, news emerged that George Soros’ family office fund is considering investing and trading in cryptocurrencies. Does this mean the famous octogenarian will begin to buy dips and get mad at FUDers? Well, not exactly. It’s important to realize that there is a difference between George Soros involving himself in the cryptocurrency markets and him having good intentions for these markets. Indeed, he has stated that he believes bitcoin to be a bubble, although what the man says, and what he does are two very different things.

The Idea

In general, the more people who come to speculate within the cryptosphere, the better. More speculators leads to more opinions which should eventually lead to greater stability in price. However, some speculators are greater than others, and in the world of finance, all that matters is size. George Soros can bring a large amount of capital into the cryptosphere, enough to disrupt it severely, especially when we consider his size coupled with his access to leverage. Imagine him taking a couple billion dollars and then getting his banking friends to provide him with leverage. If you are thinking “well, even 10 Billion is small change compared to the total market cap of the cryptosphere, I should remind you that the total money invested in crypto is far less than its market cap! Even a few billion dollars has the potential to drastically change the outline of the cryptosphere.

The Motive

We’ve established he has the means, now lets look at the motive. The motive, ultimately is always the same: profit. Just as we see price manipulations by big spoofers, so bigger players can manipulate the market further and more dramatically. In case anyone has forgotten, George Soros himself did perhaps the greatest price manipulation in the history of finance in 1992 when he went to war with the bank of England to destroy their currency peg. I will go into further detail about this in my next post, about how he could potentially do the same thing again in the cryptosphere. In the meantime, brush up on your finance history and watch this fantastic (if old) documentary about his exploits.

Conclusion: Be wary

As more and more professional financiers jump into the cryptosphere, the potential for extreme movements and unexpected outcomes remain. They are all joining because they think they can make a profit. Strategies that worked yesterday (‘HODL culture’ / “‘I can’t lose money if I don’t sell!”) will be more questionable today, now that bigger players with more complex strategies are entering the market. Stay wary, stay patient, don’t panic and always look for the silver lining in the clouds. There will be more opportunities, even with Mr Soros skulking around the cryptosphere.