All In. These Hedge Funds Are Going Heavy Into Crypto

In today’s world, hedge funds are investment vehicles designed to capture high yield returns.

Investment banks, retirement funds, and companies that need to leverage profit, while still managing risk, turn to hedge funds to get the job done.

Hedge Funds have recently Tipped Their Bullish Crypto Hands

Cryptocurrency is not going anywhere. Mainstream financial markets have noticed and are becoming open to the reality of cryptocurrency, and how to leverage it for growth and gains.

Here are a few funds and their recent crypto moves:

● Brevan Howard, a hedge fund that invests in various industries like real estate and healthcare, has announced it is expanding its crypto business with the launch of a new unit focused on managing crypto and digital assets.

● Bitcoin has been the largest contributor to gains this year at US fund firm SkyBridge Capital, according to a report by CNBC.

● Fund founder Paul Tudor Jones of Tudor Investments, a firm that manages over $38 Billion in assets spoke recently on how Bitcoin can serve as a hedge against inflation.

● Point 72 Asset Management made its first investment in a crypto company in August.

Additionally, hedge fund managers and investors in the alternative investment space are expected to be more likely to add crypto-based financial investments to their portfolios, according to a recent report conducted by Ernst Young.

Crypto is a Powerful Hedging Tool

Cryptocurrency has been around since 2009, and the growth in this sector has been remarkable. In February of 2017, the market cap for crypto was around $30 million. Fast forward to the end of 2021, and the market cap had reached close to $3 trillion!

Mainstream financial markets have noticed the growth. This new reality–that crypto is here to stay–has fund managers focused on the profit potential of crypto, as they begin to incorporate cryptocurrency into their strategies.

There are no central banks or centralized authorities overseeing cryptocurrencies. They are completely decentralized, operating solely on the consensus of those who hold them–with built in immutability, enforced by smart contracts. They also offer a high degree of privacy protection for holders.

An Even Playing Field Changes the Game

Cryptocurrency offers a way for hedge funds to manage risk without the traditional finance market. (In the current environment, tightening or loosening monetary policy impacts the movement of markets.) Cryptocurrency also offers complete transparency, which isn’t found in most financial markets despite regulations and government oversight. Industries and groups of individuals can and do hide behind regulations to game the system.

With cryptocurrency, the underlying blockchain–which serves as the “ledger of record” for all associated crypto transactions – is immutable; smart contracts can’t be altered once they are entered on the blockchain. Contrast this with fiat currency, which is not immutable. The powers in control can print more, change monetary policy, and dictate new edicts at the drop of a hat.

As inflation, expected to be 3.9% to 5.9% worldwide in 2022, wreaks havoc on traditional markets, more hedge funds will look to cryptocurrency as a viable vehicle to increase their fund’s value and minimize the risk.

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