The concept of cryptocurrency seemed like a digital pipe dream. However, it continues to become popular with finance professionals and consumers. One of the most popular types of cryptocurrency is Bitcoin, with over 46 million Americans investing in it. It has had a phenomenal rise in value since it was released in 2012. Dennis Lynch, Jr., who also goes by Marshall Lynch, is the Head of Counterpoint Global at Morgan Stanley. He believes that Bitcoin is like the character Kenny from South Park who dies in every episode yet manages to come back again. According to Dennis Lynch, Bitcoin is the “next great frontier” for the finance world.
Dennis Lynch is extremely familiar with high-risk, high-yield investments as Counterpoint Global targets different types of disruptive investments. Morgan Stanley continues to increase its crypto investments. According to Lynch, Bitcoin will continue to crash, soar, and repeat. There are four reasons why Dennis believes Bitcoin is here to stay:
- Bitcoin is scarce, with only 21 million Bitcoin in the world. The scarcity of bitcoin offers its great value.
- Bitcoin can be used to hedge your bets. Dennis believes in diversification so that if his conventional investments are not doing well, he can look at bitcoin to be productive.
- Bitcoin tends to perform well in times of chaos, making it “antifragile”. Even when the market is going through turbulence, bitcoin is expected to perform well.
- The overall consumer trust in cryptocurrency is increasing. As COVID-19 decreased the buying power of the dollar, people are looking to invest in an alternative currency.
The strategy of fund managers for cryptocurrency investment
Dennis Lynch is rooting for cryptocurrencies such as bitcoin, but what about other fund managers? Some fund managers avoid cryptocurrency entirely, while others embrace it completely. You also see fund managers who are not entirely convinced about crypto but for the diversification of their investments, they prefer to invest speculatively in crypto.
Crypto tends to rise and fall quickly, making it high-risk. This has made many fund managers question whether it is worth investing in crypto. You get to see four types of strategies by fund managers for crypto investment:
- Crypto diversity approach: In this strategy, fund managers choose to invest in a variety of cryptocurrencies such as bitcoin and ethereum. With over 6000 types of cryptocurrency to choose from, there are plenty of options available for fund managers.
- Anti-crypto approach: This strategy is used by fund managers who don’t like the volatility of crypto or don’t believe in its long-term prospects.
- Technology-first approach: There are fund managers who are more interested in blockchain, which is the technology behind crypto. These fund managers believe in the potential of blockchain, and therefore are ready to invest in crypto.
- Wait-and-see approach: The most cautious of all strategies. With the wait-and-see approach, fund managers are making a small crypto investment to see how it performs.
About Marshall “Dennis” Lynch, Jr.
Dennis P. Lynch, Jr. (Marshall) grew up in Rumson, New Jersey. He went to Hamilton College to earn his Bachelor of Arts in Government degree in 1993. He went on to earn his MBA from Columbia University in 1998. With almost three decades of experience in the industry, Dennis worked at J.P. Morgan Securities as an analyst before joining Morgan Stanley in 1998 as the Head of Small & Mid Cap Growth Investing. Lynch was named as the Morningstar Fund Manager of the Year and has a Citywire AA rating. As the Head of Morgan Stanley Counterpoint Global, Dennis co-manages a $2 billion fund.
