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Market Extra: Think his stock-market call is bearish? Trading pioneer Peterffy awaits a steeper, 25% bitcoin plunge amid FTX scandal

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Thomas Peterffy, the chairman and founder of Interactive Brokers Group Inc., is patiently waiting for a deeper retrenchment in bitcoin, as the industry digests the latest scandal to rock the digital-asset landscape.

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

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“I’m surprised that in this scandal it hasn’t dropped [by] that much,” Peterffy told MarketWatch in a Monday interview, adding that he was watching for a further, steeper dip in bitcoin
BTCUSD,
+0.09%

from its current level of around $16,000 to about $12,000.

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“Maybe it will go lower…I was expecting it to go to $12,000 bitcoin, personally,” he said.  

Peterffy’s hope that bitcoin deepens its current slump by a further 25% perhaps belies his otherwise upbeat view on the nascent sector that has been dogged by downbeat news and self-inflicted wounds.

The Interactive Brokers
IBKR,
+0.22%

trading pioneer said he has been buying bitcoin over the past four years, but declined to say how much he currently owns. His net worth is about $23 billion, according to Bloomberg’s Billionaire Index.

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

As for traditional markets, Peterffy said he still makes the case that the S&P 500
SPX,
-0.89%

is likely to see a 20% drop over the next nine months, as investors come to terms with weaker corporate earnings, companies weighed by higher interest rates and inflation.

“I don’t think inflation is going to come down anywhere near where the Fed wants it,” 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 certainly would not buy at the current levels, in my opinion,” he said.

He also attributed stomach-churning moves that the Dow Jones Industrial Average
DJIA,
-0.63%
,
the S&P 500 and the Nasdaq Composite Index
COMP,
-1.12%

have experienced over the past several months to a growing lack of liquidity and the use of stock derivatives in markets.

“Options volumes are overwhelming the stock market,” he said, referring to derivatives, such as puts and calls, that can offer investors exposure to stocks without them owning the underlying asset.

“This trend [of options buying] has accelerated in the last month or two,” he said.

Market Snapshot: Dow closes lower after stock-market gains evaporate, investors re-evaluate peak-inflation narrative

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