Hedge Funds are entering the crypto space at a rate of 2 new funds per week on average.
Where there was once only a handful of Hedge Funds now numbers into the triple digits in less than a year's time frame.
In fact, according to Autonomous NEXT there are now 110 Cryptocurrency focused Hedge Funds in existence.
With 84 of them being launched this year alone.
(Autonomous NEXT is a financial technology research house)
The total assets under management totals around $2.2 Billion for the entire crypto Hedge Fund space currently.
$2.2 Billion is not a lot of money in the grand scheme of things, but institutional money entering the space is still in its infancy.
Most of the current cryptocurrency funds are small and have limited track records. That combined with the volatility of cryptocurrencies has kept the really big money on the sidelines to this point.
What do I mean by "big money"?
Think pension funds, mutual funds, insurance companies and major endowment money. All of which still haven't really started to dip their toes in yet
But what if they do?
Well, with the above listed funds and pools, we are talking about trillions of investment dollars, and that is trillion with a "T".
(This chart is a bit old and Bitcoin is now valued around $100 Billion, so it moves up the chart a few spaces, but this still helps illustrate the amount of money that is out there)
The entire crypto space is valued around $170 Billion currently and while that may sound like a lot of money it really is just a drop in the bucket comparatively speaking.
The gold market, the precious metals markets, and the currency markets dwarf that number significantly.
Then when you factor in the kind of money we are talking about in the funds that have yet to enter the space, we could see a moon shot in prices yet again.
Something akin to what we saw in the Spring of this year, you know were we saw prices go up by 10x in a lot of altcoins, but this would actually probably dwarf that as well.
Think about it, even if just 1% starts looking for an allocation in cryptocurrency, these things are going through the roof.
How likely is this to happen?
That is the big question.
Right now not a lot of that big money is very interested in Bitcoin or cryptocurrency, but that doesn't mean that won't change at some point.
The funny thing about these big funds/pools is that they often follow the herd in terms of where they put their money, so it won't really be about convincing all of them to invest in Bitcoin and cryptocurrency, it will be about convincing one of them and then heard mentality will take over.
Once one of these guys takes the plunge and starts getting all kinds of press for their forward thinking mindset and for realizing outsized returns, others are going to be chomping at the bit to follow suit.
Again, we are talking about 1% allocations here, imagine if that were to go to 3%, or 5%... think of what that might mean for prices?
In summation:
It's great that all these funds are entering the space, but really this is still in its infancy.
The total amount under management of $2.2 Billion is not a lot of money comparatively speaking.
Once this ball starts rolling (if it's not already), it's only going to snowball and feed off itself.
At just a 1% allocation by many of these major funds or investment pools and cryptocurrency is going through the roof, again.
Stay informed my friends.
Sources:
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http://www.dineshdsouza.com/news/wall-street-delighted-hillary/
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The big pensions funds will probably start venturing into the crypto markets once the market cap of bitcoin surpasses either Apple or Amazon.
The big pension funds are very conservative, so they will let the speculative hedge funds take the lead.
3rd try.
It is an exciting scenario here!
If bitcoin just captures gold’s market cap we are talking about almost 500k per coin, considering it is not only a store of value like gold but also a global transactional currency...well, this thing is potentially huge
Really looking forward to the day, the crypto market hits 1 trillion market cap, thats going to be a huge milestone
Great Post very interesting information ;)
"Think pension funds, mutual funds, insurance companies and major endowment money. All of which still haven't really started to dip their toes in yet
But what if they do?"
Then we become... TOO BIG TO FAIL
Haha that is pretty funny!
If I was already a millionaire I wouldn't risk lots of my money in this space when I could do something much safer and maintain my millionaire status...
However I am not a millionaire :)
Favorite comment all day. I am with you here!
If you were a millionaire you would know not to have all your eggs in one basket. Most millionaires would be interested though (as it happens) to invest a reasonable amount of their belongings to this exciting new prospect. No one with a brain can stay away from this world now. They will invest/participate undoubtetly.
Good informative post on the macro level. I'm a financial industry exec and new here on Steem and to crypto (got in over the course of the last month). What's interesting is that I see alot of colleagues (bankers, financial planners, investors etc) and friends at other firms getting in, but all at small increments (to them). I'd say $5K on average, usually half into Bitcoin, some Ethereum, and if they've done research some into one or two other altcoins in case they catch a flyer on an upshot. I see 100-200 people alone getting in by year's end and if you do the math that's a quarter million in added capitalization just from South Florida where I live. I can see a big upswing for the rest of 2018. Will be watching...
That’s dope
Thanks for sharing. This asset class definitely has room to grow.
You may be right but pension funds and other large funds do not like huge volatility in prices.
They probably be more likely to invest if there is a steady increase in price.
Yes, or if there was other ways to invest... IE ETFs or something of the sort.
On the way as we read this. Just DDG it.
Increase in prices tends to reduce volatility since it takes a lot more money to move the market.
Liquidity is key....big money invested makes it liquid which is one of the reasons BTC will only get bigger.
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of course there always have to make more derivatives....
Thank you for the updates !
I believe you are right, this is only the beginning! Once Wall Street accepts cryptos as investment opportunities, things are really beginning to point in the direction of mainstream adoption!
Wall Street will never allow that. They need fiat.
New funds equals more demand! Good stuff!
This is both good and bad news, imho! Look what they did in the mortgage market in the US. If this takes off, with leverage and deritives, it will increase prices but will add a lot of volatility to an already volatile market.
this from the crypto coins goes up, so you have to be updated on this topic to be able to invest ..
Just as with some news like those that came from China they made a lot of money out of the crypto space. Other news or events can also have the opposite effect and exponentially increase the flow of money seeking shelter in the crypto.
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BTC is going wild right now and the past weeks. Do you think that we'll pass Facebook, Google...?
Wow awesome post thank you so much
The first money from Wall Street to roll in will be from the gamblers...the true speculators. These are the guys who buy anything off the normal path in search of huge returns. They roll the dice and let it fly.
That will drive prices up, especially for BTC since that will reduce their risk a bit. After that, you should see volatility settle down a bit which brings the next wave of Wall Street money, the smart forefunners. These are the ones who always seem ahead of the rest of the crowd.
This, of course, will raise the prices while reducing volatility, which means the main part of the Street money enters...and that is the golden goose...TRILLIONS.....