According to a report out the other day, over 70 new hedge funds are in the process of being created.
Not just any hedge funds, but crypto specific hedge funds.
According to Corey McLaughlin (manager at Arthur Bell), he's never seen anything like it:
"I've been in the hedge fund space since 1998, and I've never seen anything like it in volume of launches in a particular area. It's just crazy."
So, he was around during the tail end of the Dot.com bubble as well as the 2008 Financial Meltdown yet he has never seen anything like this in the hedge fund space?
Interesting...
Hedge Funds in general often follow the herd mentality, especially in regards to their focus.
They routinely are looking for the next "hot" thing.
They are often cited as being some of the brightest and the best investors out there, which is true to some degree, but it also should be noted that they rarely beat the S&P market index.
Especially lately.
In fact, this is probably one of the main reasons they are chasing cryptocurrencies to begin with. They look at their returns over the past couple years and they see that they can't beat the S&P index funds, so they need to find new investment vehicles to spice up their gains.
Enter crypto.
Since most funds have a specific investment thesis stated with the creation of their fund, they can't just deviate within that fund to new investment products.
Well technically they can do whatever they want, but they risk losing investor support, so it's kinda the same thing...
What do they do?
They create entirely new funds dedicated to these new products!
More tools at their disposal.
The good news for hedge funds is that they will have a wealth of hedging vehicles that most funds before them didn't really have access to, especially those located in the United States.
Specifically, I am referring to futures products and options, you know, derivatives.
More about those can be read here:
https://steemit.com/cryptocurrency/@jrcornel/bitcoin-options-are-on-the-way
In fact one could probably make the argument that some of these funds are only able to enter the market NOW that these new tools are becoming available.
A sign of demand.
Either way, all these new funds signify the kind of demand there is out there for cryptocurrencies. If investor money wasn't pouring into the space we wouldn't be seeing all these new funds being created.
We are riding a pretty strong wave ladies and gentleman, we need to make sure we enjoy it while it is here! :)
Sources:
https://cointelegraph.com/news/hedge-funds-tied-to-cryptocurrencies-exploding-over-70-in-pipeline
Image Sources:
http://www.capital-moments.com/introduction-alternatives-and-hedge-funds/
http://crooksandliars.com/2015/05/hedge-funds-arent-casino-capitalists
https://www.hedgethink.com/top-50-hedge-funds-world-part-6-10-1/
Follow me: @jrcornel
Thanks for sharing
hopefully this is the start of institutional money flooding into this space. It will serve to lift prices but also put pressure on developers to deliver and actually design crypto with real life use cases. Too many coins are purely designed for speculation and have no real purpose! This may help to clean things up a bit!
I totally agree with you. Though I am quite idealistic about cryptos and what they should be used for, I think there needs to be a real-life application for them as well. I really like Ripple (XRP) because it has a clearly defined vision. It wants to replace the SWIFT system used by banks with a cheaper and faster alternative. They also want to add alternative I think this is a product with a great future because it is actually supported by government institutions and large banks such as Rabobank, Santandar Bank and even the Federal Reserve stated it may be a useful tool for the banking industry.
However, I also want to see government power diminished and therefore also support and buy EOS which wants to decentralize everything. More power to the people. However, I do not see banks going away in the future, however, I hope that will adopt more market friendly alternatives once cryptos gain a foothold. If centralized governments lose the ability to interfere with banking then banks do not need to follow their rules and regulation and are free to design user-friendly products. However, I can also see that there is more centralization in XRP than in Bitcoin at the moment. It will be interesting to see how things pan out, however, I believe that XRP will become more decentralized in the future. Nevertheless, I can see some limitations on their wallets (requiring a tax ID etc.). Really not a big fan of that.
So true. So many crap coins do nothing. We need an altcoin that works with a video sharing platform. Whoever does that will be rich and destory youtube.
Hi @jcornel, I've seen earlier as a quarter report that arkinvest's crypto investment funds were outperforming everything out there, but I can't see anything named here.. what's the news? which one of the hedge fundge have started joining the trend ?
or is it just something about the ethereum alliance growing bigger with some more hedge funds ?
anybody know of any hedge funds dedicated to crypto? i'd love to email them looking for a job, i spend all my free time studying crypto anyways!
You mean like https://satoshi.fund or?
This seems like good news for those of us already in the space. But I don't fully understand the negative implications.
Thanks for the quality content as usual!
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Really interesting article. Cryptocurrencies are finally becoming mainstream.
Finally ..
people know that this market will boom, thats why they are creating hedgefunds while the market is a baby
This baby is gonna have some crazy growth spurts in the near future
It's going to be interesting to see if they are any better at picking cryptos than your average cryptocurrency user. The later is used to all the scams, but the hedge funds come from a world where that stuff is almost cleansed away.
The crypto market would soar if the hedge funds started to pour money in the market! The entire crypto market cap is relatively tiny compared to other financial markets. Buy and hold!
Enthusiasm NOT misplaced but this story a nothing burger ... "According to a report the other day..." People everyone of you can "hedge" your cryptos Better than Wall Street or Madison Ave too for what this ad is worth.
Come join our crypto think tank, participate, learn and prosper on steemit ♨
Very useful
Thanks..
This is both terrifying and scary.
Hedge funds might be able to push for developments going in one direction that benefits them instead of promoting best technical solutions. Ethereum going for Proof of Stake might open the door for them to manipulate it, or maybe it is preparing to minimize their power as no hedge fund can reach enough power.
I'm not entirely sure, but it seems that it will make the market very bullish. And if one fund cashes out suddenly, it may create a downward chain reaction that will be scary.
Plus if they start using derivatives that bet on the fall of a crypto coin, the scenario is set for a nightmare.
It's is going to be interesting how the communities and the coins react to this.
A friend recommended me IOTA and I think it's a Sleeping Giant!
nyc post
btw you know Corey McLaughlin is quite clever :P and yeah your everything is absolutely right ! Agreed :)
its Great :) thank you for sharing
70? Great not I will never be able to simplify my choices!
@jrcornel, interesting post. Seems crypto is spreading in all spheres of life.
I wonder if it is a matter of time before high frequency trading enters the crypto market... Goldman, JPM, Citi, etc...
Great article. It's a good time to be in crypto and it's about to get even better :)
like this thought. Let the baby grow and be part of this
new cultureVery informative, thanks!
Crypto spreads in all areas of our lives ... Very informative article ! Thank you @jrcornel
Good post, and music to my ears :)
This shows that cryoto / blockchain technology is here to stay ,upped. Good post indeed however , I hope that they will not spoil the industry for the common man with their greed.
thank you for sharing @jrcornel
i am new to steem. but i have been trying to get as much information as possible. today i could understand something bout the Hedge Funds. thank you for the light thrown to me. by the way the picks used are apt..
I like your post @jrcornel
Love the post - Great content - Thanks For share !!!!!ENJOY LIFE!
This could be why the cryto world is going up n up recently. But i hope they aren't making a bubble, sine bubbles go 'pop'.
It makes sense that people would look to invest through and active management mechanism like a hedge fund versus taking all the risk themselves on something they do not understand. That said the beauty of many of the coins is that you don't have to put in much.
I think Hedge funds are in trouble. They charge too much for a market that has become focused on fees. The ETFs will dominate here too once they are allowed.
😃😃😃😃😃
I'm waiting to see if we get more index linked funds and ETFs too. The thing I've been hearing is that more and more investors are leaving traditional investments because the returns are so poor.
This is all good for the crypto community as it marks a huge influx of cash and hence growth.
Yep. People sitting in stocks making 10% per year are listening to their buddies rejoice about making 200% in the last year... that is bound to start bringing in the money.
It's just about money and business their goals is to have profit while crypto is still hot and worth to invest.
I think they will work as people are investing in crypto currency let's wait and watch.
In the meantime BTC hit ATH - wonder if theres any connection here. Tip!
What once was a place to hide from FIAT may help induce its collapse .
Hedge funds make me nervous!
The financial sector is always lookging for more area to invest i.e. playing their game. It is only a matter of time when they jump onboard. Money needs to be invested and bubbles to be made. :-)
Good info
Barbarians are at the gate, options derivatives and wall street leverage will forever change Bitcoin. Good video here:
That's awesome and great to read it again and again thanks for sharing
The key here isn't making new crypto only funds, but when mainstream funds start investing in crypto.
We want new money remember guys, not that already floating around the cryptosphere.
Hii just upvote you can you also
https://steemit.com/bitcoin/@makhaleel/a-large-japanese-department-store-chain-marui-has-partnered-with-bitcoin-exchange-bitflyer-to-accept-bitcoin-payments-starting
This is crazy news. I never thought id see hedge funds crossing paths with CC.
interesting article ! thanks for sharing
Very informative post. I'm a newcomer to steemit and cryptocurrencies all together. Its a lot to learn at first and i appreciate you sharing this information for noobies like myself. Keep it up
yes, I read this report yesterday
good sign for the crypto market
"Bullish"