Think his stock call is bearish? Trading pioneer Peterffy expects steeper 25% drop in bitcoin amid FTX scandal

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By Mark DeCambre

“I’m surprised that in this scandal he hasn’t come down a lot,” says Peterffy

Thomas Peterffy, chairman and founder of Interactive Brokers Group Inc., patiently awaits a deeper bitcoin pullback as the industry digests the latest scandal to rock the digital asset landscape.

Leading crypto platform FTX filed for bankruptcy last week amid reports that it used client funds to back an affiliated hedge fund founded by then FTX CEO Sam Bankman-Fried.

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“I’m surprised that in this scandal he hasn’t gone down [by] as much,” Peterffy told MarketWatch in an interview on Monday, adding that he was watching for a further steeper decline in bitcoin from its current level of around $16,000 to around $12,000.

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“Maybe it will go down…I was expecting it to hit $12,000 in bitcoins, personally,” he said.

Peterffy’s hope that bitcoin will deepen its current slump by another 25% perhaps belies his otherwise bullish view of the nascent sector that has been dogged by disappointing news and self-inflicted hurt.

The Interactive Brokers (IBKR) trading pioneer said he has been buying bitcoin for the past four years, but declined to say how much he currently owns. His net worth is around $23 billion, according to Bloomberg’s Billionaires Index.

“There are people who own it for the long haul…and like me, I bought mine about four years ago,” he said. Interactive Brokers introduced crypto trading to its platform about a year ago, but does not take custody of the assets. This is done through Paxos Trust Co.

Turning to traditional markets, Peterffy said he still maintains that the S&P 500 should see a 20% decline over the next nine months as investors accept falling corporate earnings as companies are weighed. by higher interest rates and inflation.

“I don’t think inflation is going to come down where the Fed wants it to go,” Peterffy told MarketWatch, referring to the central bank’s desire to keep inflation at a level considered healthy for the economy, at 2%.

Peterffy said he expects the S&P 500 to “bottom out at 3,000 and 3,300.”

“I definitely wouldn’t buy at current levels, in my opinion,” he said.

He also attributed the turbulent moves the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite Index have seen in recent months to a growing lack of liquidity and the use of equity derivatives in the markets.

“Options volumes are overwhelming the stock market,” he said, referring to derivatives, such as put and call options, which can give investors exposure to equities without them having to. own the underlying asset.

“This tendency [of options buying] accelerated over the past two months,” he said.

-Mark DeCambre

 

(END) Dow Jones Newswire

11-14-22 1649ET

Copyright (c) 2022 Dow Jones & Company, Inc.

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