Hedge Funds Finally Find Love for Bitcoin and Crypto
Some of the biggest hedge funds are reportedly increasing their cryptocurrency holdings.
The list includes names like Brevan Howard Asset Management LLP and Tudor Investment Corp, according to the the wall street journal.
“More crypto than gold”
Tudor Investment declined to comment, while Brevan Howard did not immediately respond to a request for comment.
Institutional investors as a whole traded $1.14 trillion worth of cryptocurrencies in 2021, according to Coinbasecompared to $120 billion the previous year, and more than double the $535 billion for individual investors.
“There is an opportunity for outsized returns for asset managers who want to be early investors in successful digital assets,” said Michael J. Torosian, partner at Baker Botts LLP. “Investors view cryptocurrencies as uncorrelated to traditional asset classes and a good tool for diversification and a hedge against certain risks like inflation.”
Torosian said improvements in the regulatory landscape along with the establishment of exchanges and more ways to store and protect digital assets “have given managers a better opportunity to evaluate adding crypto to their portfolios.” .
Brevan Howard launched a cryptocurrency hedge fund in January that will begin accepting outside investors.
The fund makes bets on the price direction of bitcoin, ether, and other cryptocurrencies, while also seeking cross-currency arbitrage and investing in blockchain technology.
Brevan Howard created a crypto division, BH Digital, in September, which manages over $250 million and has 12 portfolio managers.
The company has appointed Colleen Sullivan, co-founder and former CEO of CMT Digital, to lead its crypto investments.
Alan Howard, co-founder of the company, has also invested in crypto, blockchain and digital token businesses.
Paul Tudor Jones, who runs Tudor Investment, bought cryptocurrencies to try to hedge against rising inflation.
Hudson Bay Capital Management LP, a $15 billion New York-based hedge fund, has seen growing profits from cryptocurrency trading, the Journal reported, citing a person familiar with the situation, as did other big names. companies.
In February, Ray Dalio, who founded the world’s largest hedge fund, Bridgewater Associates, reiterated that he owned “a bit” of bitcoin, calling it “almost a younger generation’s alternative to gold. “.
“Bitcoin is like gold, although gold is the well-established alternative to fiat currency,” he said.
Dalio also said that it would be reasonable for every investor to allocate 1% to 2% of their portfolio to bitcoin, the most popular cryptocurrency.
“One of the greatest stories in finance”
Hedge funds and were not always cryptocurrency funds.
Mark Mobius, founder of Mobius Capital Partners, told CNBC in November that cryptocurrencies are more like a religion than investments.
“People shouldn’t look at these cryptocurrencies as a way to invest,” he said. “It’s a way to speculate and have fun. But then you have to go back to stocks at the end of the day.”
Citadel’s Ken Griffin recently admitted that he was wrong to compare bitcoin to the tulip bubble in 2017.
He noted that crypto has been one of the “greatest stories in finance” over the past 15 years.
Other financial services executives have also criticized crypto.
Dimon has in the past described cryptocurrencies as worthless and referred to them as Crypto tokens rather than currencies.
Jamie Dimon, CEO of JPMorgan Chase (JPM) – Get the JPMorgan Chase & Co. report.has in the past described cryptocurrencies as worthless and referred to them as Crypto tokens rather than currencies.
Yet the financial giant claimed the metaverse last month by opening its Onxy lounge to Decentraland, a browser-based 3D virtual world platform.
Dimon’s photo hangs on the virtual wall.
The crypto captured mainstream attention on Wednesday after President Joe Biden signed an executive order on cryptocurrency.
Among other things, Biden’s order directs the Treasury and other departments to issue policy recommendations “to address the implications of the growth of the digital asset industry and changes in financial markets for consumers, investors , enterprises and equitable economic growth”.