It wasn’t until recently that hedge funds began paying attention to the market of digital currencies. Rollout of futures trading for cryptos and soaring prices have some large firms considering whether or not it is time to enter the market.
Funds are looking to profit by either buying bitcoin and other cryptocurrencies or by betting against them. Their entry and acceptance could provide more fuel to bitcoin’s already volatile trading. Quantbot Technologies Fund, Schonfeld Strategic Advisors , and others say they are working to understand how they might be able to profit from bitcoin.
“The market has gotten more interesting and the barrier of entry has fallen. Especially now that bitcoin futures are available” said Keith Knutsson of Integrale Advisors.
Some large firms and investors are already investing in bitcoin. Horizon Kinetics LLC, a firm that manages over $6 billion in hedge funds, mutual funds, and other products has been rather vocal about its recent purchases of bitcoin and other cryptocurrencies. One of the main reason for the exposure is the firm views the equity market as expensive, and the possible upside sizable for bitcoin as “enormous”.
Already, there are around 20 funds, managing a total of roughly $2 billion in assets, that predominantly trade cryptocurrencies. Some hedge-fund managers are becoming more willing to accept the risk of bitcoin after facing losses in traditional investing. The introduction of bitcoin-based futures by CME Group and the Cboe Global Markets Inc. adds to the legitimacy of the currency for some big investors. Cryptocurrencies could be something to look into.