Bitcoin too risky, even for a pro gambler like David Walsh

Professional gambler David Walsh says the price of bitcoin may tumble to zero, confessing he is not a fan of volatile cryptocurrencies.

Australian businessman and professional gambler David Walsh.

Professional gambler and art collector David Walsh says the price of bitcoin may tumble to zero, confessing he is not a fan of volatile cryptocurrencies even though he believes blockchain technology has value.

Mr Walsh, a mathematician and wealthy professional gambler who is part of a syndicate that bets $10bn a year, said bitcoin and other such currencies were prone to more extreme trading and very sharp declines in value.

“Future opportunities will consist of not trying to forecast the market but trying to forecast algorithmic uncertainties like flash crashes. You just accept those and trade the other side, they‘re going to keep happening in bitcoin,” Mr Walsh told the Sohn Hearts & Minds investment conference in Hobart on Friday.

“Bitcoin is going to go to zero … well if it doesn‘t go to zero it’s never going to be a forecastable commodity out of which you can make money,” he added.

“If you’re trading in bitcoin I’m not on your team, or if you’re trading in crypto in general.”

Despite his aversion to bitcoin, Mr Walsh said there was merit in blockchain technology underpinning the cryptocurrency.

“Blockchain is a very good idea … the figures are good,” he said.

His comments come as crypto currency markets reel from the collapse of the FTX exchange, which has sparked investor panic around the world. On Friday, another crypto lender, Genesis, sought an emergency $US1bn ($1.5bn) loan of from investors before it suspended withdrawals.

Mr Walsh is an avid art collector whose wagering exploits are well known. In 2009, a syndicate he was involved in won almost $17m during the Melbourne Cup carnival. He has also been involved in long-running disputes with the Australian Taxation Office. He told the conference that he lost once every ten years, and didn’t win in the years in between.

Mr Walsh – who founded Hobart’s Museum of Old and New Art in 2011 – also gave conference attendees insights into his biggest wins which occurred in bets on horse racing and lotteries.

Bitcoin’s value has continued to plunge.

“Finding a system that works and is stable and works for a long time is extremely difficult, to the point where … it’s not as a result of skill you acquire a system that works by luck, but once it works, it might keep working,” he said.

The largest dollar winning bets came from a Tokyo horse race on Christmas Eve which netted the syndicate about $63m, while Mr Walsh said a slightly bigger payday came from the German lottery after the group purchased millions of tickets.

Zeljko Ranogajec, one of the world’s biggest punters, is also part of Mr Walsh’s syndicate.

Mr Walsh said he kept away from sharemarkets because the variables were too unpredictable. Mr Walsh, uses complex mathematical models to “trade” in his chosen gaming markets, mostly horse racing and lotteries.

The rise of artificial intelligence in equities trading to him means the opportunities won’t lay in trying to forecast market direction, but rather to anticipate increasing volatile events such as high-speed trading can create.

The conference – which covered a wide array of topics – also heard from a panel debating sport as an asset class.

“I’d be so bold to say there is a bubble, we are in the middle of it,” said Gerry Cardinale, founder of RedBird Capital Partners, which owns AC Milan and other major sporting teams globally.

“It’s very hard to buy well and your returns trajectory is set up from the buy.”

RedBird only in August clinched a $US1.3bn ($1.9bn) deal to buy the Italian team. Mr Cardinale believes interest the world over in various leagues and sports are what makes it such a compelling investment asset.

Speaking at the same event, Hermitage Capital founder and human rights activist chief Bill Browder said while market volatility had created opportunities, cash was a top investment class at present because assets would become “really cheap”.

“We’re in a world with high inflation and central banks need to do something about that … they’re going to raise interest rates and so the value of assets will go down. Once we get to a point when rates are peaking and inflation starts to go down I think there’s going to be a great opportunity to buy assets,” he added.

“But up until that point, I think that we’re just gonna see things winding down, (amid) rising interest rates, making it more attractive to hold cash when you get an interest payment.”

On the military conflict by Russia in Ukraine, Mr Browder was largely positive about the role the US was playing, but noted more could be done. “I think president Biden has done a really good job … Could he do a better job? Yes,” Mr Browder added.

“If you look at what Biden’s done for Ukraine he’s given them enough resources, military and financial and other resources, to stop Russia from winning … But Biden has not given Ukrainians enough to beat the Russians, and it’s really frustrating.”

Mr Browder said he was the largest foreign investor in Russia until 2005, when he was denied entry and declared a threat to national security for exposing corruption in Russian state-owned companies.

Originally published as Bitcoin too risky, even for a pro gambler like David Walsh