How Hedge Funds Throwing In Large Amounts of Money Will Impact Bitcoin
If you keep an eye on the crypto space and have been watching the past couple of weeks you will have seen a lot of changes, like I have! I am quite enjoying seeing so many new developments and watching as the price of Bitcoin continues to rise.
It is inevitable that it will fall again because no market can continue upwards forever, but Bitcoin has nailed some major milestones like a $7500 price point with a sixty percent rate of growth in a single month. I don’t care who you are or what you think of crypto, that rate of growth is impressive!
Changing Investment Strategies
I have personally chosen to change the amount of money that I have in my crypto accounts and will be focusing most of my available cash into various crypto investments once the price comes down again. I don’t buy anything when it is on the rise, ever, because that is how you lose money when the market stabilizes itself and comes back down.
Please don’t think that my entire portfolio will be in crypto, because it won’t. I believe in diversification so I have some money in other commodities like real estate. I just know that I will be redirecting quite a bit of my available resources into crypto during the next downturn because I believe strongly in the power of this market.
How the Market is Changing
Part of the reason why I am such a big believer in crypto is because so many people are starting to take notice that have a lot of control over world financial markets. Because of the significant gains being seen in cryptocurrency, big players like hedge funds are finally starting to take notice and are pouring some major capital into the market. When players with money start to take notice, markets can change quite quickly one way or the other.
Notice how I said “one way or the other.” This is because Wall Street is starting to support crypto right now and the growth is explosive. However, if the whales decide that they no longer want to support then there could be an explosive downturn. If you don’t believe me, then look at historical financial market trends.
How Hedge Funds are Impacting the Crypto Market
Currently, there are 124 hedge funds focused solely on investments in cryptocurrency and other digital investments with approximately $2.3 Billion in their coffers. Most of these funds focus on employing venture capital type strategies while others work on trading of currencies and machine learning/data science.
Reasons for why these hedge funds have chosen to invest in cryptocurrency range from supporters believing that digital currency will change the world as much, or even more so, than the Internet did to wanting to follow the big players like Michael Novogratz. Novogratz was a Fortress hedge fund manager but is now looking to create his own fund in digital assets with an estimated $500 million. He plans to call this fund Galaxy Investment Partners and it will noticeably be the largest fund of its kind.
Novogratz has said that he fully believes that cryptocurrency is a bubble that will eventually burst but it will be a mania first.
“We could never have understood the ubiquity of the internet in 2017 even at the height of the bubble,” Novogratz said. “Ten years, 15 years from now, blockchains and decentralized systems will be everywhere.”
The total estimated financial assets owned by hedge funds is reportedly about $3.15 Trillion so the money that has been put into cryptocurrency investments is marginal in the grand scheme of things. I am waiting to see what happens in the coming months regarding hedge funds and other big players. I am thinking that an ETF will be put out in the future if it is approved.
Financial Experts are Weighing In
Financial experts that have studied the trends believe that the astronomical growth of Bitcoin and Altcoins in the past couple of months has been because of the large sums of money that hedge funds and large investment firms have thrown into the market. If more huge sums of money are continually added to the market like this then the price will likely continue to go up.
The forks that are happening to make improvements to the blockchain will have an impact on the market based upon what miners choose to get behind and what the players with heavy money in the marketplace choose to endorse as well. There is a potential for more huge growth and faster if the forks are accepted but changes always bring some growing pains with it. So, time will tell how the market will react to these changes and I am very curious to see what unfolds.
I would love to hear your thoughts about how hedge funds are impacting the Bitcoin market and how the market will change going forward. Feel free to share or leave a comment!
