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Billionaire hedge fund manager Bill Ackman remains optimistic about the cryptocurrency sector despite the widespread deleveraging event caused by FTX’s collapse.
In a thread of tweets Monday, the businessman equated crypto to the telephone and the internet, noting that all three shared one thing in common- “Each technology improves on the next in terms of its ability to facilitate fraud,” he said, referring to the problems faced by the telephone and Internet in their infant years. Ackman, who has previously been a strong crypto sceptic, expressed his approval for crypto, suggesting that the sector could explode into something big in the future.
“I was initially a crypto sceptic, but after studying some of the more interesting crypto projects, I have come to believe that crypto can enable the formation of useful businesses and technologies that heretofore could not be created,” he added.
Earlier this month, Bitcoin plunged to record lows alongside Ethereum, and other cryptos as the reality of FTX’s collapse weighed down on investors. In a contagion effect, crypto firms such as Genesis Capital found themselves trapped in a liquidity crunch pausing withdrawals as they wait for the market to cool off. Exchanges such as Binance and Crypto.com were also forced to disclose their reserve balances as user confidence in centralized exchanges waned.
According to Ackman, although fears around the FTX debacle were reasonable, he was convinced that crypto technology had proven its worth beyond such events. “The ability to issue a token to incentivize participants in a venture is a powerful lever in accessing a global workforce to advance a project,” he said adding “Initially, I assumed that there is no intrinsic value to any of the tokens and therefore they simply represent a modern-day version of tulip mania without the aesthetic benefits. But after examining several interesting crypto projects, I began to understand how a token could build intrinsic value over time.”
 
 
The businessman went on to note that the problem with crypto was unethical promoters who would create tokens to facilitate pump-and-dump schemes. According to him, it was also possible that most crypto coins are used for fraudulent purposes rather than for building legitimate businesses.
He noted that the solution to these problems was the enactment of sensible regulation and enforcement of sound oversight.
“Despite crypto’s ability to facilitate fraud, with the benefit of sensible regulation and oversight, crypto technology’s potential for beneficent societal impact may eventually compare with the impact of the telephone and internet on the economy and society,” he said.
