Hedge Fund Crypto Investments Top $2 billion in 2017

Hedge funds have invested a cumulative total of over $2 billion in cryptocurrency in 2017, according to estimates published today.

Global banking firm Morgan Stanley announced the figure in its “Bitcoin Decoded” client note, based on estimates from studies carried out by the bank.

Of the more than 100 hedge funds specifically established to invest in cryptocurrencies, some 84 were established over the course of this year, coinciding with the strong price performance across all major cryptocurrencies over the period.

Up from around $800 in January, bitcoin has already topped almost $20,000 this year, with many analysts forecasting the price to rise still further in the medium to long term.

Most significantly, the data from Morgan Stanley shows the extent to which investments in bitcoin and other cryptocurrencies have moved into the mainstream in 2017, with more institutional investment expected in 2018.

The news comes at a time when bitcoin futures have already begun fueling institutional interest further, providing access for traditionally constituted hedge funds to investments in cryptocurrency without actually holding coins.

With two major exchanges in the U.S. now offering bitcoin futures, and an expectation that 2018 could see more exchanges follow suit around the world, some analysts are suggesting the surge in 2017 is only the beginning.

Hedge fund billionaire Mike Novogratz has been one of the most vocal proponents of institutional investing in cryptocurrency markets, setting up a fund in the value of $500 billion, including substantial personal cash, to invest in digital currencies.

Similarly, Bill Miller at Miller Valued Partners announced earlier in the week that his MVP1 fund was already at nearly 50 percent on bitcoin and bitcoin cash investments, up from an initial exposure of just five percent.

HFR, which provides data on hedge funds, has said the increase in institutional interest is a direct result of the growth in cryptocurrency markets.

“Investor interest in funds offering exposure to blockchain technologies and cryptocurrencies has surged in recent months as these innovations continue to move towards the mainstream and generate compelling opportunities for investors, portfolio managers, traders and other market participants.”