Investors are becoming eager to invest in the next technological revolution.
Cryptocurrency and blockchain technology have become incredibly popular amongst individual and institutional investors across the globe. Many have been leaning more towards investing in hedge funds relating to the cryptocurrency industry instead of the individual cryptocurrencies.
See JP Morgan: Crypto Could Help Diversify Portfolios
Traditional Retail Firms & Stock Brokers To Clients “Our Hands Are Tied”
We’re not aware of any products available from traditional or online brokers that will easily allow you to invest in cryptocurrencies, outside of doing so on your own with an account with one of the exchanges that buy and sell them.
Cryptocurrencies were the best-performing currency in 2015 and by far the best performing asset class of 2017. Business Insider, Forbes & CNBC covered some of the outlandish returns in some of the top cryptocurrency hedge funds last year.
There are Crypto Hedge Funds that did over 24,000% and 80,000% respectively in 2017. No, That’s not a typo.
It’s important that you recognize that these investments are not for the faint of heart, but it’s growing and yes, they present a very real investment opportunity.
Alternatives To Traditional Portfolio Allocation
We believe that the time has come for investors and financial firms to classify investing in Bitcoin, cryptocurrencies and blockchain based technologies as alternative investments, and thus having a place in a properly allocated investment portfolio. Over the next few years, it’s clear there will be more and more opportunities to invest in them. As these investment opportunities open up, they need to be classified appropriately in order to be placed in investor portfolios using proper asset allocation models.
Most people will dismiss them, including probably your advisor. But we venture to say that with the progress (and profits) being made, over the next year or two, we won’t be the only person telling you about how they may fit the alternative investment sleeve of your portfolio.
Cryptocurrency Investment Vehicles
Only a handful of ETFs and other exchange traded products have significant exposure to Bitcoin or other cryptos. One is Grayscale’s Bitcoin Investment Trust ( GBTC ). It’s attracted $1.4 billion in assets and is up more than 680% this year.
One of the main reasons that these institutional investors have refused to put their money into the individual currencies lies in the fact that they are relatively unstable. This is where the idea of cryptocurrency hedge funds come in.
Actively managed hedge funds are able to give investors a broader and more secure way to invest in cryptocurrency, without being subject to as high degree of risk. Obviously assuming that you are dealing with a reputable group and a manager with experience.
There are a ton of cryptocurrency hedge funds run by newcomers with little to no experience managing assets. Choosing to work with a reputable firm is extremely important.
Security & Regulation
The biggest challenges hedge funds are facing relate to security and regulation. With security/custodian solutions still being developed by third party companies, and some large banks not yet providing custodial services.
As to regulation, the top cryptocurrency hedge funds usually partner with top law firms and regulatory experts to ensure that they stay abreast of new regulation and have an eye on the horizon for future decisions by the SEC and other regulatory bodies.
The market is evolving, and money that’s been made in blockchain and crypto is being invested back into the sector, leading to increased competition and the creation of new coins and service providers, one hedge fund expert said.
Those who can identify the future leaders can make a lot of money.
According to the new index launched by Hedge Fund Research, investors have a huge interest in cryptocurrency hedge funds. There was “explosive growth” in crypto hedge fund interest by investors over the course of the last year.
Cryptocurrencies could go on a bull run greater than last year and pass the trillion-dollar mark in terms of value, experts told CNBC
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The price of Bitcoin and other cryptocurrencies are highly volatile. It is common for prices to increase or decrease by over 20–100% in some coins in a single day. Although this could mean potential huge profits, this also could mean potential huge losses. DO NOT INVEST ALL YOUR MONEY IN CRYPTOCURRENCIES. Only invest money which you are willing to lose.
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