Time to Get Out Of Cryptos, Hedge Fund Manager Says After Thursday's 'Lehman Moment'

The cryptocurrency market has been in the doldrums, and the correction has polarized people over whether a bottom has been reached.

What Happened: Hedge fund manager Whitney Tilson said on Thursday that it was time to get out of cryptocurrencies and wait to "rejoin the game." 

The analyst said with such a speculative asset, investors would have to price in momentum, given that it is impossible to value cryptocurrencies.

The price momentum, however, is now completely in the wrong direction, Tilson said.

Secondly, the analyst noted that macroeconomic conditions have worsened, weighed down by supply chain bottlenecks and the Ukraine war that has sent inflation soaring to a 40-year high. 

To contain inflation, the Fed has promptly embarked on a rate-hike spree, triggering a stock market collapse and full-blown crash among all speculative assets, Tilson said.

Tilson also said cryptocurrency markets experienced a  "Lehman Moment" on Thursday, referring to the financial market collapse triggered by the now infamous financial firm after it filed for bankruptcy on Sept. 15, 2008. On that day, the S&P 500 fell 4.8%, bringing losses from the market peak 11 months earlier to 23%, the analyst said.

"Many buyers then probably figured the sell-off was overdone.. but it was just getting started," Tilson said, pointing out that the index lost 43% over the next six months.

The odds of a very bad outcome have clearly risen quite a bit, he added.

Price Action: Bitcoin BTC/USD and Ethereum ETH/USD traded above key psychological levels on Sunday evening at press time, as the global cryptocurrency market cap rose 3.8% to $1.3 trillion at press time.