Study Reveals The Majority of Crypto Hedge Funds Suffered Losses

The overly-optimistic forecasts predicting a bitcoin-led era of cryptocurrencies by the end of 2020 are increasingly seeming like a distant fragile dream. More so now than ever as the most popular digital asset in the world has dipped below $5000. This downward spiral of bitcoin, according to many analysts, is due to its “lack of a fundamental value.”

Bitcoin is now More Vulnerable Than Stocks and Bonds
Nearly a year after its heydays in 2017, during which its price went all the way up to $20,000, bitcoin today struggles at around the mid-$4000s. With no sign of immediate reprieve looming on the horizon, the cryptocurrency seems more vulnerable than ever in the recent past – even in comparison with stocks and bonds.

As the cryptocurrency with the most profound impact in the market, plunging bitcoin prices are also taking a toll on the asset class as a whole. And adding more to the worries, a series of events have unfolded in 2019 rendering the crypto market more volatile and vulnerable.

The crackdown on initial coin offerings — however well intended — played a part in the slowdown of the crypto economy and so did the increasing possibility of tough regulations kicking in the United States and in other major economies around the world.

While the growing interest shown by conventional investors may have been a positive news coming from within the crypto space (increasingly scarce nowadays), even that may have somewhat backfired. According to a Crypto Fund Research study, as many as 150 hedge funds dedicated to digital assets are likely to launch in 2019 alone. However, most of them have suffered heavy losses, having made their initial investments when crypto prices were still closer to their all-time-peak.

Was Last Year’s “Bitcoin Boom,” the Product of Market Manipulation?

Well, that’s the question the U.S. regulators are reportedly currently coming in on as bitcoin price continues its downward trend.

According to Bloomberg, the United States Justice Department is looking into the possibility of traders using controversial cryptocurrency Tether to prop up the value of Bitcoin. Tether is a stablecoin that claims to be pegged to the U.S. Dollar such that its value will always be $1 per token.

Citing people familiar with the ongoing investigation, the report claims that federal prosecutors launched a criminal probe into cryptocurrencies earlier in 2018.
If the report is accurate, then there is a high probability that the investigators are now evaluating the possibility of crypto exchange Bitfinex using Tether to illegally coordinate bitcoin’s price moves.

As of press time, neither Tether nor Bitfinex has responded to the reports of them being under investigation by the U.S. regulators.


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Author: Priyeshu Garg
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‘Inevitable’ that Pensions and Endowments Make Crypto Play: Hedge Fund Exec

Cryptocurrencies may soon land the white whale of the investing industry: institutional funds such as pensions and endowments.

That’s according to Ari Paul, chief investment officer at cryptocurrency hedge fund BlockTower Capital, who told CNBC that he believes it’s “inevitable” that these institutional investment funds will add cryptoassets to their portfolios — sooner rather than later.

“I do think it’s inevitable from a few angles,” said Paul. “Even if they never believe in it as an asset class, they’re smart enough to recognize the alpha opportunity.”

“Endowments could pull the trigger at any moment. They’re on the fence,” he added.

Paul, who served as a portfolio manager for the University of Chicago’s strategic hedge fund prior to founding BlockTower last year, explained that institutions are interested in investing in Bitcoin and other cryptocurrencies but are hesitant to be the first to do so.

“We’re in a bear market until new buyers are enticed,” he said, adding that an Ivy League school making a minor investment could cause ripple effects throughout the institutional market. “Even a small dollar amount is legitimizing. If that happens, every family office says, ‘Oh, Yale’s in. That gives us the excuse.’”

Before that happens, though, institutions will need access to trustworthy cryptoasset custodians. Assuming that custodians expand their services and continue to build their reputations, Paul estimates that endowments could make their first cryptocurrency investments within three to four months. Pensions and other institutional funds could then follow approximately six months after that.

Paul is not alone in this prediction. On Thursday, Pantera Capital issued a rare buy recommendation for Bitcoin, explaining that the fund is convinced that institutions are preparing to finally take the plunge into cryptoassets.

“I rarely have such strong conviction on timing. A wall of institutional money will drive the markets much higher,” wrote Pantera founder Dan Morehead.

Meanwhile, Wall Street strategy firm Fundstrat is doubling down on its bet that the Bitcoin price will reach $25,000 by the end of 2018 based on the premise that the markets will turn bullish once tax-based sell pressure evaporates.

 


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Author: Josiah Wilmoth
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