Crypto as a Driving Force in Hedge Fund Growth

The FX market has been unpredictable for quite some time, but now it seems that hedge funds with a quantitative concentration—those known for making lightning-speed trades on grand scales—are looking at crypto for their next big investment move. Crypto’s value differs significantly across markets yielding a plethora of opportunities for hedge fund managers with strong computer skills and strategies to reap large returns swiftly; the extreme price variability offers quick profit.

Overall, crypto assets have expanded by close to 200% in the last year, going from less than $800 billion to $2.3 trillion. This growth can be attributed to the overall dearth of oversight in this area, leaving it wide open for market-making opportunities. The latest report from PwC indicated that quantitative trading strategies are used the most often in crypto exchanges. These approaches use a simultaneous buy and sell strategy to profit from price differences between coins; they are perfect for markets that are low compliance and highly fluid.

But only the swiftest and most agile hedge funds—those that manage to refine their trading practices in real-time—will manage to survive and thrive in this constantly changing market. They will need a comprehensive solution for their extant trading requisites that they can then use alongside mainstream market data. Managers will need to not only be connected to the regulated crypto exchanges but also bypass major counterparty-to-counterparty platforms.

All Eyes on Crypto as Market Opens

Two weeks after GameStop (NYSE: GME) set the hedge fund sector and the entire finance world on edge with a meteoric spike and equally rapid return to earth in January, all eyes will be on the cryptocurrency sector as Wall Street returns from the President’s Day holiday on Tuesday.

Like GameStop did last month, Dogecoin’s (NASDAQ: DOGE) price has exploded in recent weeks, building from $0.007195 on New Year’s Day to top out at $0.080717 on February 8, a staggering 1021.85% jump. 

Predictably, Doge – which has been described as both a joke and a scam – eased off towards the end of the week, ending trading on Friday at $0.060044. But the second wild ride by a previously minor market player may indicate a shift inside the finance industry – and may also have raised regulatory concerns for lawmakers.

Last week, the Bank of New York MellonCorp (NYSE: BK) announced it would begin holding and trading cryptocurrencies including Doge and Bitcoin (US:BTCUSD), which has also jumped more than 70% since the beginning of the year, as part of its asset-management service.

“Digital assets are becoming part of the mainstream,” Roman Regelman, chief executive of BNY Mellon’s asset-servicing and digital businesses, told the Wall Street Journal.

As the market for cryptocurrencies grows, so does the politics surrounding them. Last week Treasury Secretary Janet Yellin raised an alarm that “misuse” of Bitcoin could  be an effective way to fund terrorism (in the past, Yellin has also said that digital currencies held “promise”), while first-term Senator Cynthia Lummis (RWY),  a holder of Bitcoin, held her state out as a choice destination for cryptocurrency enthusiasts.

“I just don’t want us to mess this up,” the senator told Yahoo!Finance.

Cryptocurrencies Gain Following Among Americans

According to a recent survey conducted by Finder, the number of Americans who own cryptocurrencies went up by 81% from 2018 to 2019. That translates to ownership in cryptocurrency by about 36.5 million Americans.

In 2018 almost 8% of US citizens were owners of cryptocurrencies, but that number increased to 14.4% in 2019. The survey showed that the average value of cryptocurrency in each person’s digital wallet amounted to about $5,447. However, the survey also found that around 75% of those people owned less than that amount, with the median amount only $360.

The report pointed out that the most well-known cryptocurrency is Bitcoin (BTC), but there are other types of crypto, and over half of BTC owners also own other kinds of crypto.

Men like crypto better than women, apparently, at a rate almost double that of women. Of all the men surveyed, 19% said they own crypto, while only 10% of women answered in the affirmative. That means that 23.6 million men are owners, while only 12.9 million women are.

Most people are holding their digital currency as an investment. According to the survey 61% say they own crypto as an investment vehicle. The second most common reason is as a method of making transaction payments, with about 29.3% giving transactions as the reason they own crypto. About 25.6% said they own crypto as a way to keep their savings outside of traditional banks.