Computer trading has allowed some managers to predict and bet on falling prices.
A small group of hedge funds are profiting from the digital asset market turmoil that has already erased trillions of dollars in the total value of cryptocurrencies.
Some computer-controlled funds that use algorithms to try and predict price movements and trade crypto and other markets have profited from the rapid decline of assets such as bitcoin and the moon, while many other investors have suffered huge losses.
Among the investors capitalizing on these rates is former Lehman Brothers and Morgan Stanley trader Jay Janer, who is a founding partner of KPTL Arbitrage Management in the Cayman Islands.
His Appia fund, which bets on the rise and fall of crypto futures prices as part of its strategy, profited from the collapse of the Luna cryptocurrency by $40 billion last month. Their trading robot quickly opened short positions – bets on falling prices – to take advantage of the crypto token’s rapid decline. Luna collapsed from over $80 to near zero in a matter of days.