Bitcoin finds slagroom ter puny funds; large institutions still on sidelines, Reuters
Fresh YORK (Reuters) – Digital currency bitcoin has found favor among smaller investors, thanks to the availability of funds designed to invest te it, but remains a niche among the larger investing community.
Investors at some family offices, smaller mutual funds, and traders at hedge funds say bitcoin has helped comebacks and demonstrated a low correlation with other asset classes.
Hopes that bitcoin would become a broadly used alternative to other currencies helped buoy its price to more than $1,000 te December 2013, when its market capitalization wasgoed $13 billion.
But the market cap has retreated since then, to about $6.Four billion spil of Thursday.
Early enthusiasts for the crypto-currency were drawn to its revolutionary ideals of transparency and a lack of central or official control. The risks of dealing ter bitcoin were laid naked ter 2013 when Tokyo-based exchange Mt Gox collapsed after admitting it had lost the omschrijving of hundreds of millions of dollars of investor funds.
The currency&rsquo,s earlier ties to gambling and criminal websites did not endear it to traditional investors.
Jeremy Millar, founder and managing fucking partner at Ledger Vrouwen ter London, estimated that 50 to 90 procent of bitcoin&rsquo,s current $6.Four billion market cap is held by near-institutional money such spil individuals at hedge funds and family offices. That has not switched overheen the last two years.
He does not have an estimate for institutional investment holdings of bitcoin. But he said they are likely to be insignificant, compared with the smaller investors who have fewer limitations about fund allocation.
&ldquo,What is clear however is that overheen the last two years, bitcoin has emerged from its &lsquo,hacktivist&rsquo, origins to a more institutionalized ecosystem which includes the participation of hedge funds, traders, and professional investors,&rdquo, said Millar.
BITCOIN Te PORTFOLIOS
Funds dedicated to investing te bitcoin are relatively puny. The largest is the Pantera Bitcoin Fund, a $160 million hedge fund founded by Dan Morehead, formerly of Tiger Management, available to institutions and individuals who invest $50,000 or more.
According to a Pantera Bitcoin Fund folder, the fund wasgoed launched ter July 2013, a period when bitcoin BTC=BTSP traded at around $65. On Thursday, it traded at $418.80, a build up of more than 500 procent from July 2013. The hard did not comment on fund show or its investors.
The majority of the Pantera Fund&rsquo,s investors are family offices and high nipt worth individuals, said two people familiar with the fund.
The Grayscale Bitcoin Investment Trust, with assets of more than $60 million, is another voertuig for investors. GBTC is backed by bitcoin advocate Barry Silbert and his Digital Currency Group.
It is the only publicly traded U.S. security ter the over-the-counter market invested te bitcoin. Volume is lean, with a few thousand shares traded daily, according to Thomson Reuters gegevens.
Antonis Polemitis, managing director at Ledra Capital te Fresh York, a family office specializing te education and technology, said that on average, clients have allocated 1 to Trio procent of their portfolios to bitcoin.
&ldquo,A loterijlot of people will take that bet with 1 procent of their assets,&rdquo, he said. &ldquo,A 1 procent loss does not switch anyone&rsquo,s life te any way. If it goes up Ten times, then you get to feel very brainy.&rdquo,
Some investment managers say having bitcoin ter portfolios has helped vertoning.
ARK Invest, which manages four exchange-traded funds with $240 million ter assets, holds GBTC te its $12 million Next Generation Internet ETF and the $7 million ARK Innovation ETF.
Chris Burniske, analyst and blockchain products lead at ARK Invest ter Fresh York, said since investing ter September 2015, GBTC has contributed 67 onderstel points to the Next Generation Internet ETF&rsquo,s comeback and 62 poot points to the ARK Innovation ETF.
For 2015, the Next Generation ETF posted a 15.29 procent terugwedstrijd, while the Innovation ETF had Trio.76 procent gains.
For Kingsbridge Wealth Management, a multifamily office ter Lasnaad Vegas with $150 million te assets, GBTC has become a good diversifier because so far it has had a low correlation with other asset classes, said David Dunn, the stiff&rsquo,s founder and chief investment officer. The rigid has about $1.7 million invested te bitcoin and its underlying technology, the blockchain, Dunn said.