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  • Tom Burke
  • Posted Articles: 6
  • Last Posted: 2017-07-28 10:57:14
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Hedge Funds Show Little Appreciation for Bitcoin

2017-07-28 10:57:14

Bitcoin has soared high this year. It reached new record highs, exhibited stellar performances, marked new milestones, and surpassed major assets. The digital currency is starting to gain the trust of some central banks and companies around the globe. It rallied 180% last week and has managed to outmatch the S&P 500 index and the Nasdaq.

However, one asset class is reluctant to get into bitcoin: hedge funds.

A hedge fund manager, who has been in the industry for nearly two decades, pointed out he has minimal knowledge regarding bitcoin. Some fund managers have the same view as well, while others said they are pretty bothered by the virtual currency’s restrictive investment rules.

Another fund manager with 25-year experience said they are really concerned about the security and volatility of this cryptocurrency. The manager added such factors do not sit well with them since they are concentrating on a risk-adjusted return basis. Not to mention these currencies can be intercepted or stolen. There is also a perception that bitcoin has not yet proven its worth despite remarkable advances.

The aforementioned woes have led to another one: reassuring clients or investors, with some hedge fund managers saying these people are more complacent with knowing their money is placed in sound or tangible investments including gold.

What should bitcoin do in order to make itself attractive to hedge fund managers and the like?

For bitcoin to improve its standing, global banks should adopt these digital currencies as payment schemes. This is also to ignite broad interest among most market players and financial institutions. One of the fund managers said that easing cash transfer could make it a better option for banks to the arduous procedure of sending money. That way, along with the stronger institutional support, bitcoins could then become more alluring to a greater investor network.

Nobody knows when hedge funds will begin professing its love for bitcoin. Only time can tell.