More Hedge Funds are starting to Discover Bitcoin and are Very Optimistic in the future of cryptocurrencies.
More Hedge Funds are starting to Discover Bitcoin and are Very Optimistic in the future of cryptocurrencies.
A hedge fund is an investment fund that pools capital from accredited individuals or institutional investors and invests in a variety of assets, often with complex portfolio-construction and risk-management techniques.[1] It is administered by a professional investment management firm, and often structured as a limited partnership, limited liability company, or similar vehicle.
[2][3] Hedge funds are generally distinct from mutual funds, as their use of leverage is not capped by regulators, and distinct fromprivate equity funds, as the majority of hedge funds invest in relatively liquid assets.
[4][5] The term "hedge fund" originated from the paired long and short positions that the first of these funds used to hedge market risk. Over time, the types and nature of the hedging concepts expanded, as did the different types of investment vehicles. Today, hedge funds engage in a diverse range of markets and strategies and employ a wide variety of financial instruments and risk management techniques.
[3] Hedge funds are made available only to certain sophisticated or accredited investors and cannot be offered or sold to the general public.[1] As such, they generally avoid direct regulatory oversight, bypass licensing requirements applicable to investment companies, and operate with greater flexibility than mutual funds and other investment funds.[6] However, following the financial crisis of 2007–2008, regulations were passed in the United States and Europe with intentions to increase government oversight of hedge funds and eliminate certain regulatory gaps.
[7]Hedge funds have existed for many decades and have become increasingly popular. They have now grown to be a substantial fraction of asset management,[8] with assets now totaling around $3 trillion.
[9] A rapidly growing number of multi-billion dollar hedge funds are beginning to discover bitcoin and the cryptocurrency market.
Earlier this week, Patrick O'Shaughnessy, the manager of $6 billion quant asset management firm O'Shaughnessy Asset Management, revealed in an interview with Business Insider that he was recently introduced to bitcoin and cryptocurrencies by Matthew Goetz, a former vice president at Goldman Sachs.
Goetz shared his plans to operate BlockTower Capital, a hedge fund focused on the cryptocurrency market, with Ari Paul, the former portfolio manager for the University of Chicago endowment, and attempted to explain the advantages of bitcoin as a decentralized and peer-to-peer financial network.
Upon first encountering bitcoin and the cryptocurrency market, O’Shaughnessy admitted he had no fundamental understanding of the structure of cryptocurrencies and their technical intricacies. He said in an interview:
"He told me he bought a bunch of cryptocurrencies: ether, bitcoin, and litecoin. And I was like, 'What the hell is a cryptocurrency?'"
Since then, O’Shaughnessy has studied bitcoin and the cryptocurrency market. In a meeting, Paul shared his experience in the cryptocurrency market as a trader and an investor. As the conversation went by, O’Shaughnessy continued to become astounded by cryptocurrencies and decentralized financial platforms they offer as an alternative to the global banking system.
To assist newcomers in the cryptocurrency sector including O’Shaughnessy, Paul, Goetz, and the rest of BlockTower Capital team alongside Naval Ravikant, the CEO of AngelList, Peter Jubber of Fidelity, and Olaf Carlson-Wee, the first employee of Coinbase, produced an audio documentary on the rise of cryptocurrencies and blockchain technology entitled “Hash Power.”
According to a new study conducted by LendEDU, the majority of people in regions like the US that have well-established cryptocurrency exchange markets and industries have heard of bitcoin. The LendEDU research revealed that 78.6 percent of Americans have already heard of bitcoin and cryptocurrencies.
The mainstream adoption of bitcoin is growing at a steady rate. Although its market cap is still at $68 billion, it is attracting the interests of large-scale investors, traders, and most importantly, institutional investors such as multi-billion dollar hedge funds. Regulated exchanges in matured markets such as the US, Japan, and South Korea are increasingly focused on providing trading platforms that can address the liquidity issue and demand from institutional investors. Gemini, a US exchange, already partnered with Chicago Board Options Exchange, the largest options exchange in the US, to serve institutional and retail traders.
Tyler Winklevoss, the Chief Executive Officer of Gemini, explained:
"Gemini's key concerns in the cryptocurrency ecosystem have always been security, compliance, and regulatory oversight. By working with the team at CBOE, we are helping to make bitcoin and other cryptocurrencies increasingly accessible to both retail and institutional investors."
References:
Wikipedia: https://en.wikipedia.org/wiki/Hedge_fund
Joseph Young from Bitconnect: https://bitconnect.co/bitcoin-news/747/multi-billion-dollar-hedge-funds-are-discovering-bitcoin-and-are-very-optimistic/
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