David Einhorn, president of Greenlight Capital, speaks at the 14th CNBC Delivering Alpha Investor Summit in New York City on November 13, 2024.
Adam Jeffrey | CNBC
David Einhorn of Greenlight Capital believes that speculative behavior in the current bull market has risen to a level beyond common sense.
“We have reached the ‘Fartcoin’ phase of the market cycle,” Einhorn wrote in an investor letter obtained by CNBC. “Other than trading and speculation, it serves no other obvious purpose and fulfills no need that is not served elsewhere.”
A cryptocurrency token called “fartcoin” exploded in popularity when Donald Trump's re-election unleashed a storm of animal spirits on Main Street. The meme coin is now on track for a market capitalization of $2 billion, surpassing several US-listed companies.
More meme coins have appeared since the inception of Fartcoin. President Donald Trump Fired $TRUMP, a meme coin built on the Solana platform. Its market value rose over the weekend Past 14 billion dollars. The coin at one point fell more than 20% in the past 24 hours, but has since pared its losses to about 3%. Trump's wife Melania too unveil coin.
“There is nothing stopping the release of more tradable coins,” Einhorn said. “Maybe we'll leave the fartcoin phase of the market and enter the memecoin phase for Trump (and Melania). It's anyone's guess what will happen next, but it looks like it's going to be wild.”
Einhorn's message comes as investors push stocks higher, buoyed by expectations of lower taxes and deregulation from the second Trump administration. On Tuesday, the day after the opening Dow Jones Industrial Average It rose more than 400 points. the Standard & Poor's 500 and Nasdaq Composite It rose 0.8% and 0.7%, respectively.
Shorting Leveraged Bitcoin ETFs
Greenlight took advantage of the craze surrounding cryptocurrencies during the fourth quarter by betting against some popular ETFs indirectly linked to bitcoin.
The two funds the firm has focused on are the T-Rex 2X Long MSTR Daily Target ETF (MSTU) and the Defiance Daily Target 2X Long MSTR ETF (MSTX). These funds use financial derivatives to attempt to achieve double daily returns precise strategy, A software company that has transformed itself into a Bitcoin treasury tool in recent years.
The funds have sometimes struggled to achieve this goal due to MicroStrategy's volatility and a limited supply of more user-friendly derivatives to generate leveraged returns.
Greenlight took short positions against those funds during the quarter, and was partially offset by owning MicroStrategy shares in an arbitrage trade that was “materially profitable,” the letter said.
