Monday, October 30, 2017

Financialization in the cryptocurrency sector continues as there are now over 120 crypto based hedge funds

For what is readily labeled as a de-centralized industry, the cryptocurrency sector is becoming more and more financialized every day.  And according to a new report out on Oct. 30, there are now over 120 hedge funds that manage cryptocurrency assets for themselves and for clients.

The explosive growth of cryptocurrency values has drawn in some of the investment world’s biggest players - hedge fund managers. Over the past six months, the number of crypto-focused hedge funds has exploded, moving from around 70 in August to more than 120 at the end of October. 
In the last year alone, according to CNBC, more than 90 cryptocurrency funds have launched, bringing the net total to 124. These funds have more than $2.3 bln under management, with a third of the total using venture-capital style investment strategies. 
The most notable addition among these is the $500 mln fund launched by Galaxy Investment Partners founder Michael Novogratz. The famous investor has publicly shared his view that lots of money can be made with digital currencies, even as the market moves. – Coin Telegraph
When you couple these private funds with the myriad of high frequency trading firms also getting into the sphere, the reality is growing for Wall Street to one day soon co-opt currencies like Bitcoin so that they can be leveraged in the paper markets the same way gold and other commodities have been for many decades.  And this method of buying cryptos in the end dilutes their purpose as customers don't really need a fund manager to invest in cryptocurrencies for them since it is easy enough for them to do it on their own at a cryptocurrency exchange.

2 comments:

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