Asia’s biggest investors are reportedly targeting the cryptocurrency market and have started adding crypto hedge funds to their portfolio in an attempt to break into the industry.
A Coindesk report interviewed various crypto hedge funds catering for investors who claimed they had seen a real spike in terms of individual investors getting involved.
One such company is BBShare, a Hong Kong-based hedge fund whose have guaranteed a $10 million in committed capital from its investors. They say that most investors are wealthy individuals or families.
Speaking to Coindesk, Jett Li, chief investment officer at BBShares said,“The pace of [institutional] investor allocation to crypto this year has been much faster,” and that the “Demand for secure and efficient institutional asset allocation into crypto is quite strong.”
An Asia based crypto trading firm Amber Group had seen a similar spike in interest. Their spokesperson told Coindeask that they had also seen a rise in investment and interest.
However, unlike other parts of the world, the Asia crypto hedge fund business is relatively small. Just five percent of crypto hedge funds are in Singapore and there are not many elsewhere in Asia.
The lack of size may be down to the strict regulations within the continent. China has made it impossible to open this type of hedge fund due to regulations and banks in Hong Kong and Singapore are fairly suspicious towards the accounts. BBShares said it took them a year to open due to various red tape.
However, expect to see more of these hedge funds popping up as investors begin to warm towards cryptocurrencies. But what has prompted this shift towards a once-maligned industry?
For BBShares the main reason for increased investment is the White Paper for Facebook’s Libra token which was released earlier this year. The June announcement has seen a terrific rise in investment, with Jianbo Wang, chief investment officer of CYBEX calling it, “the best advertising you can hope for.”
A big company like Facebook diving into the industry, alongside other major companies like Walmart, JP Morgan, and Whatsapp will only serve to illustrate that crypto is not just a fad used by criminals and tech geeks.
Alongside this rise in perception, Bitcoin has also proven to be a very profitable asset. This may be another reason for the increase in investment from Asian investors looking to make money.
Bitcoin the best thing to invest in
Much like the internet companies in the past, Bitcoin is now becoming a high performing and transformative investment opportunity. The proof? Bitcoin is the best performing asset of 2019 so far.
The 120% price rise seen in this past year is the reason why Bitcoin has come out on top, blowing away the competition which has the likes of the U.S. real estate index and U.S. equities.
Perhaps the bleak global outlook in the traditional stocks and economies that are subject to conditions not felt by the crypto industry will also be a determining factor for investors. This is especially in the case of China, which has seen big changes since the start of the US/China trade war.
Will we see more investment?
With the Libra factor and Bitcoins price leap, is this spike an anomaly or will it continue further? The move from the Chinese government to launch a stable cryptocurrency through its central bank will no doubt peak investors interest more.
It could also open the door for Chinese investors and others to look at the industry more kindly. Not only that, but the apparent softening of the regulations and outlook on the industry may also give the ability for crypto hedge fund companies to pop up.
However, due to the volatile nature and the Asian market’s cautious view, it is hard to say what the future may hold for crypto hedge fund companies. Despite this, BBShare’s Li is confident:
“This market moves so quickly. But we are very bullish on crypto’s long-term potential and our fund’s value proposition.”
Currently, big institutions and hedge fund investors have shied away, but it is only a matter of time before they arrive. Individuals may need to act swiftly before the market dynamics change too drastically.