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David Einhorn, president of Greenlight Capital, speaking at the 14th CNBC Delivery Alpha Investor Summit in New York on November 13, 2024.
Adam Jeffrey | CNBC
David Einhorn of Greenlight Capital believes that speculative behavior in the current bull market has gone beyond common sense.
“We have reached the ‘Fartcoin’ stage of the market cycle,” Einhorn wrote in an investor letter obtained by CNBC. “Aside from trade and speculation, it serves no other obvious purpose and fulfills a need not being served elsewhere.”
A crypto token called “fartcoin” became very popular when the re-election of Donald Trump caused a storm of animals on Main Street. The meme coin’s market cap is now approaching $2 billion, surpassing many US-listed companies.
Since the inception of Fortcoin, more coin memes have appeared. President Donald Trump launched $TRUMP, a meme coin built on the Solana platform. Its market capitalization increased over the weekend for 14 billion dollars. The coin at one point fell more than 20% in the last 24 hours, but has since trimmed its losses to around 3%. Trump’s wife, Melania, too promulgated a coin
“There is nothing stopping the launch of many more tradable coins,” Einhorn said. “We may be leaving the Fartcoin stage of the market and entering the Trump (and Melania) memecoin stage. It’s anyone’s guess what’s going to happen next, but it looks like it’s going to be wild.”
Einhorn’s letter came as investors pushed stocks higher on expectations of tax cuts and deregulation from a second Trump administration. On Tuesday, the day after the inauguration, Art Dow Jones industrial index scored more than 400 points. The S&P 500 and Nasdaq Composite grew by 0.8% and 0.7%, respectively.
Leveraged Bitcoin ETF Closing
Greenlight took advantage of the crypto frenzy in the fourth quarter by betting against some popular ETFs indirectly linked to Bitcoin.
The two funds the firm focused on were the T-Rex 2X Long MSTR Daily Target ETF ( MSTU ) and the Defiance Daily Target 2X Long MSTR ETF ( MSTX ). These funds use derivatives to try to achieve double daily returns micro strategy, a software company that has turned into a Bitcoin treasure trove in recent years.
Funds have sometimes struggled to achieve this goal due to MicroStrategy’s volatility and the small number of derivatives that are most easily leveraged to generate leveraged returns.
The letter said Greenlight held short positions against those funds during the quarter, partially offset by holding MicroStrategy shares in an arbitrage trade that was a “substantial winner.”
