George Soros, a high-profile cryptocurrency bear, is reportedly preparing to start trading digital currency at his New York-based family office, as first reported by Bloomberg on Friday. Soros, who runs the $26 billion investment firm, called the high-flying cryptocurrency market a "bubble" back in January. (See also: Bitcoin May Fall By a Third in 2018: Study.)
Soros Fund Management investor Adam Fisher, who oversees macro investing at the firm, has reportedly received internal approval to make the move in recent months but has not yet ventured into a virtual currency transaction, according to the report, which cited people familiar with the matter.
The 87-year-old investor made headlines earlier this year regarding his remarks at the World Economic Forum, where he called bitcoin a "typical bubble" and said that "it is not a currency." Also at the gathering in Davos, Switzerland, Soros called for "more stringent" regulations on U.S. tech titans and forecast the demise of Facebook Inc. (FB) and Alphabet Inc. (GOOGL), which he views as tech monopolies.
Digital Currency and Dictatorship
Bitcoin, trading at $6,604.49 as of 4:38 PM UTC, has crashed 67% from all-time highs reached late last year near $20,000. Unlike other bitcoin bears, Soros did not make comments forecasting the drastic sell-off in bitcoin, which has plagued the cryptocurrency market in 2018.
"As long as you have dictatorship on the rise you will have a different ending, because the rulers in those countries will turn to bitcoin to build a nest egg abroad," said Soros on Jan. 25. Since his remarks, the digital currency has lost over a third of its value as investors fear heightened government regulation around the world, including a crackdown in South Korea, one of the bitcoin's most flourishing markets.
While the news marks Soros' first potential direct investment in cryptocurrency, his family office has already been indirectly betting on the volatile asset through its stake in Overstock.com Inc. (OSTK) in the fourth quarter. As the investment firm upped its position in the online retailer-turned-cryptocurrency company, it became the discount e-commerce platform's third-largest shareholder. Shares of the Salt Lake City-based company have crashed 43% year-to-date (YTD) on news of an investigation by the Securities and Exchange Commission (SEC) into its planned initial coin offering (ICO). The retailer, which was one of the first to accept digital currency as a payment, intended to launch an exchange for cryptocurrencies in which its own digital coins could be traded. (See also: Bitcoin Will Become World’s ‘Single Currency’: Dorsey.)
Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns cryptocurrency.