Bitcoin’s spectacular rise this year is diving investors’ fear of missing out, or “fomo,” and it’s forcing Wall Street to pay attention to cryptocurrencies as well, the Financial Times writes.
Five-fold Rise Doesn't Quell Investors' Thirst
Advisors have been telling their clients to stay away from bitcoin, calling it a bubble, but investors now feel like they may have already missed out on a golden opportunity, Ami Ben David, co-founder of venture capital fund Spice, tells the publication. Bitcoin’s value rose from around $1,000 in January to over $5,500, the Financial Times writes.
But the interest persists, and one private baker based in Lodon tells the publication that his ultra-high net worth clients are considering investing in bitcoin. And the company will have to figure out a way to satisfy that demand even though it prefers that clients avoid the product, the banker tells the Financial Times.
Bitcoin is now the most crowded trade in the world, according to a Bank of America Merrill Lynch survey of 200 fund managers around the world cited by the Financial Times. At least 68 hedge funds invest in cryptocurrency in some way, according to Autonomous NEXT research cited by the publication.
And some of them are making better than solid returns: The Altana Digital Currency Fund rose 413% year to date as of the end of August, compared to the 5.5% average for all hedge fund strategies, Financial Times writes. Some of these funds have attracted attention from well known Silicon Valley venture capitalists, such as Polychain Capital, whose CEO tells the publication that it has a $250 million fund investing in initial coin offerings (ICOs) and cryptocurrencies.
Nonetheless, there’s plenty of pushback. China has now banned ICOs while regulators in the UK are paying closer scrutiny. JPMorgan Chase CEO Jamie Dimon has called bitcoin an outright fraud, Financial Times writes. Dimon and Larry Fink, who’ve said that bitcoin is a tool for money launderers, have warned that governments will eventually come down on the product, according to the paper. And Bridgewater founder Ray Dalio and hedge fund manager Julian Robertson remain skeptical, according to the publication.
