How popular is Bitcoin? 120 hedge funds are focusing on Bitcoin

Although Bitcoin and ICO are subject to increasing regulation, Bitcoin is gaining favor among more and more investors.

According to CNBC, there are currently 124 hedge funds that specifically target Bitcoin and digital currencies. Financial research company Autonomous Next provided this set of data to CNBC and said that the total assets of these funds investing in digital currencies have reached as much as US$2.3 billion.

Data shows that among all funds targeting digital currencies, 37% use venture capital strategies, with total assets reaching $1.1 billion. 32% of funds trade digital currency assets, with a total of $700 million in assets under management. 10% of funds focus on using machine learning and algorithms to manage digital currencies, with $100 million in assets under management.

The soaring prices of digital currencies such as Bitcoin, Ethereum, and Litecoin have also attracted investors' attention to encrypted digital currencies and blockchain technology. Those who support digital currencies believe that blockchain technology may bring about changes to the world in the future that are comparable to the Internet.

Some people believe that Bitcoin's recent record high of $6,100 is related to the increased attention of institutional investors. Although some Wall Street executives are still skeptical about Bitcoin, more and more fund managers are turning to digital asset management, including Paul Brodsky, the author of Macro Allocation, and Michael Novogratz, the former manager of Fortress Hedge Fund. Novogratz also invested $500 million to create a new company, Galaxy Investment Partners.

Wall Street Journal previously mentioned that most similar companies are small in scale and have incomplete traceability records, which makes global pension funds, insurance companies and large and mature fund companies rarely invest in these companies. The sharp volatility of digital currencies has made many institutional investors afraid to put their money into digital currencies. To this day, mainstream institutional investors still stay away from digital currencies such as Bitcoin.

Digital currencies such as Bitcoin and Ethereum are extremely volatile. In early September, Bitcoin once climbed to a high of $5,000, but then lost almost a third of its market value in less than two weeks. However, it has since continued to rise, with the price almost doubling and currently remaining at around $6,000. Ethereum's volatility is even more obvious. From the beginning of this year to June, the price of Ethereum soared nearly 50 times, but then quickly shrunk to one-fifth.

Currently, digital currencies are also subject to more and more regulation. China has banned ICOs, and the U.S. Security and Exchange Commission has also warned investors to pay attention to the investment risks of digital currencies.

For mainstream hedge funds, placing their core business on high-risk assets like Bitcoin is obviously a huge gamble.

According to HFRI (Hedge Fund Research) data, the total size of the hedge fund industry in the third quarter of this year was $3.15 trillion. In comparison, the size of digital currency hedge funds is still small.